U.S. Markets

Dollar plummets against yen on G7 meeting, Japanese data

NEW YORK (Reuters) - The U.S. dollar tumbled nearly 1 percent against the yen on Monday on Japanese trade data and Washington’s resistance to currency intervention by Tokyo, but was little changed against the euro as investors awaited fresh U.S. economic data.

An employee of a bank counts US dollar notes at a branch in Hanoi, Vietnam May 16, 2016. REUTERS/Kham

The dollar was last down 0.86 percent at 109.19 yen, near a session low, after data showing Japan logged a trade surplus for the third consecutive month. The dollar was set for its biggest daily percentage decline against the yen in more than three weeks. ECONJP

Besides the trade data, a Group of Seven finance ministers’ meeting concluded on Saturday with the United States warning Japan against intervening to weaken the yen, a rift that is perceived as preventing Tokyo from acting.

“You had no firm resolution coming from G7 with respect to the potential for intervention from the Bank of Japan, which makes people a little bit more comfortable in being long yen, and you had a marketplace that was frankly over-short yen,” said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

The dollar erased most of its earlier gains against the euro EUR=, which last traded roughly flat at $1.1217 after hitting a session low of $1.1187.

Hawkish comments from San Francisco Federal Reserve President John Williams and St. Louis Fed President James Bullard on Monday initially drove the dollar’s gains against the euro by reinforcing expectations for a potential U.S. interest rate increase in June or July.

The dollar gave back those gains as investors held out for more U.S. data, said Shahab Jalinoos, global head of FX strategy at Credit Suisse in New York.

“There’s only so much the dollar can rally in the absence of proof that the data will compel the Fed to act in June or July,” he said.

Jalinoos said he expected the U.S. central bank to wait until September at the earliest to raise rates again, and that the euro would likely remain within a range of $1.10-$1.16 until the next release of U.S. monthly employment data on June 3.

U.S. data on new home sales, durable goods orders, consumer sentiment and first-quarter GDP are set to be released this week. More Fed officials also are scheduled to speak.

The dollar index .DXY, which measures the greenback against a basket of six major rivals, was last down 0.12 percent at 95.223.

Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by Paul Simao