Nikkei leads Asia markets’ declines – CNBC

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In the currency market, the dollar index, which measures the dollar against a basket of currencies, was at 94.08 as of 1:04 p.m. HK/SIN time. On Friday, the index finished at 94.23.

The Japanese yen broke the 108 handle, with the dollar/yen trading at 107.86 Monday afternoon, compared with Friday’s close at 108.03.

Major exporters in Japan saw significant sell-off on Monday, with shares of Toyota dropping 3.33 percent, Nissan down 1.59 percent and Honda off 2.41 percent. A stronger yen is a negative for exporters because it reduces their overseas profits when converted into local currency.

The yen’s relative strength against the greenback has led many analysts to question whether Japanese authorities might intervene in the market. But some questioned whether intervention would help much at all, which would leave policymakers with few tools to address the currency’s rise.

Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management, explained in a note late last week that much of the decline in the dollar/yen pair “may be blamed on dollar weakness rather than yen strength as [the] Fed’s reticence to tighten policy has driven U.S. yields lower, compressing much of the gap between the two currencies.”

Schlossberg added that any intervention from the Bank of Japan could prove to be problematic if U.S. rates continue to fall in tandem.

“For dollar/yen to see any sustained support, U.S. yields would need to stabilize and begin to rise again and Bank of Japan (BOJ) may be waiting with its teeth clenched for the Fed to act,” he said.

Elsewhere, the Australian dollar traded at $0.7570.

The Chinese yuan traded nearly flat against the dollar, with the dollar/yuan pair at 6.4650. Before market open, the People’s Bank of China set the yuan midpoint rate at 6.4649 to the dollar; China’s central bank lets the yuan spot rate rise or fall a maximum of 2 percent against the dollar relative to the official fixing rate.

Nikkei leads Asia markets’ declines – CNBC}