The dollar edged up in Asian trade

TOKYO : The dollar edged up in Asian trade Friday as traders reacted to positive US trade data and signs that central banks are becoming more confidence about the economic outlook, dealers said.

The dollar rose to 88.34 yen in Tokyo morning trade from 88.25 in New York late Thursday. The euro fell to 1.4728 dollars from 1.4732 but gained to 130.13 yen from 130.01.

The greenback was stronger after government data showed that the US trade deficit narrowed unexpectedly in October, with a jump in exports offsetting a smaller rise in imports.

A separate report showed new US claims for unemployment benefits rose in the past week, although holding below the level of 500,000.

“US economic news was generally good and this contributed to both a rise in stocks and bond yields which ended up having a neutral effect on the dollar,” NAB Capital strategist John Kyriakopoulos in a note.

Investors were digesting the Bank of England’s decision not to expand its asset purchase plan, as it left its key lending rate on hold at 0.5 percent.

“Central banks around the world seem to be turning a little bit more confident about the sustainability of a (world) recovery,” said Calyon analyst Sebastien Barbe.

But that does “not imply a drastic tightening of monetary conditions in the very short term, as central banks seem keen on protecting the recovery,” he cautioned.

Reserve Bank of New Zealand governor Alan Bollard on Thursday indicated that the Bank could start tightening monetary policy in the middle of next year, earlier than previously expected.

The Reserve Bank of India meanwhile tightened conditions for local companies borrowing from overseas, but made it clear that it does not intend to curb capital inflows, seeking to support an economic recovery, Barbe noted.