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Dollar rises to lower 94 yen on brighter outlook over U.S. economy.

TOKYO, April 26 Kyodo

The U.S. dollar rose to the lower 94 yen level Monday morning in Tokyo amid expectations for an improved U.S. economy following strong U.S. new home sales in March and higher Treasury yields.

At noon, the dollar fetched 94.28-30 yen against Friday's 5 p.m. quotes of 93.93-94.03 yen in New York and 93.36-38 yen in Tokyo.

The euro changed hands at $1.3375-3376 and 126.10-13 yen versus

$1.3378-3388 and 125.66-76 yen in New York and $1.3267-3269 and 123.86-90 yen in Tokyo late Friday.

The U.S. unit retained its strength in Tokyo, trading locally around a three-week high against the yen, after a U.S. Commerce Department report which showed that new home sales in March soared 26.9 percent from the previous month to an annualized 411,000 units, marking the sharpest growth in 47 years.

The euro remained firm against major currencies amid receding worries about Greece's financial problems after the country formally asked eurozone nations and the International Monetary Fund for a financial aid package, dealers said.

''Rising equity prices following Greece's official request for an EU-IMF aid package are contributing to the yen-selling and buying of higher-yielding currencies,'' said Yuji Kameoka, senior economist and foreign exchange strategist at the Daiwa Institute of Research.

But Kameoka added that the euro's further gain could be limited, as a single bailout plan is not expected to solve Greece's financial problems.

A news report Friday that some members of the U.S. Federal Reserve's Federal Open Market Committee are in favor of asset sales by the central bank also contributed to higher U.S. Treasury yields and a stronger dollar, dealers said.

''As the FOMC meeting nears, speculation about the meeting has grown,'' Kameoka said. ''If the upcoming FOMC statement includes concrete steps for an exit strategy, the dollar could rise to the 95 yen level,'' he said.

The market is now focused on U.S. medium-term bond auctions and the release of its first quarter gross domestic product scheduled later this week, dealers said.
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Publication:Japan Weekly Monitor
Date:Apr 26, 2010
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