Dollar edges up yen after dropping on US political turmoil

[TOKYO] The US dollar edged up in early Asian trading on Monday, moving tentatively away from the four-month low against the yen plumbed in the previous session on concerns that White House personnel changes will impair President Donald Trump's ability to pass tax reform and stimulus measures.

Investors looked ahead to the US Federal Reserve's annual central banking symposium in Jackson Hole, Wyoming on Thursday and Friday.

The dollar was up 0.1 per cent at 109.265 yen, after it slipped as low as 108.605 yen on Friday, its lowest since late April.

It largely shrugged off the University of Michigan's consumer sentiment index, which improved to its strongest in seven months in early August, reflecting confidence in the outlook for the economy and in personal finances as the US stock market holds near record highs.

Reports of the impending departure of senior White House adviser Stephen Bannon, known for his economic nationalist views, were confirmed on Friday.

Mr Trump's decision to fire Bannon could undermine his support from far-right voters but might ease tensions within the White House and with party leaders.

"In the end, the yen made 'buy-the-rumour, sell-the-fact'moves on Bannon's departure, and the net effect might be neutral as the market has already moved on and is focusing on Jackson Hole," said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities in Tokyo. "But as the positive economic data apparently had little effect on the dollar, it is possible that no market-moving factors will emerge from the Fed conference," he added.

Fed Chair Janet Yellen is scheduled to speak at the conference. But after minutes from the Federal Open Market Committee's latest meeting showed members expressing concern about soft inflation, she is not likely to give new guidance on policy, Fed observers say.

European Central Bank President Mario Draghi will not deliver a new policy message at the Fed conference, two sources familiar with the situation said, tempering expectations for ECB to start charting the course out of stimulus.

About US$45 billion of euro-dollar currency options on the exchange rate will expire in the three days leading up to the Wyoming meeting.

On Monday, the euro was steady on the day against its major counterparts at US$1.1751 and 128.39.

The dollar index, which tracks the greenback against a basket of six major rivals, added 0.1 per cent to 93.477.

Speculators reduced their negative bets on the US dollar this week to US$8.84 billion from US$10.23 billion in the latest week through Aug 15, Reuters calculations based on Commodity Futures Trading Commission data showed on Friday.

REUTERS