Dollar up against yen
Posted on November 22, 2007
The dollar rose against the yen on Wednesday after a report showed the U.S. current account gap in the fourth quarter was the smallest since 2005, but concerns about the U.S. housing market capped the gains.
Wednesday’s current account and trade data sparked profit-taking on the yen’s rise of more than 1 percent on Tuesday, when markets were roiled by concerns about the U.S. subprime mortgage market.
“The focus will be on equity markets and on the subprime sector, but right now the dollar is having a little relief because of the trade number being better than expected,” said Liz Bussanich, senior vice president with BMO Capital Markets in New York.
The narrower-than-expected current account gap provided a brief distraction from the recent focus on the rise of the yen with the unwinding of the the carry trade, in investors borrow cheaply in low-interest currencies to invest elsewhere.
“It’s still about the carry trade, so maybe we’re having a pullback now but I still think we’ll see the yen stronger,” said Bussanich.
The dollar climbed against the yen, rising to an intraday high of about 116.75 yen
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