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The dollar fell versus the yen on Monday, dragged lower by sliding Tokyo stocks and data showing Japan logged a much larger-than-expected trade surplus in April. If a country's exports exceed its imports, as in Japan's recent case, there is in theory a high demand for its goods and therefore for its currency. A Group of 7 finance ministers' meeting concluded on Saturday with the United States warning Japan against intervening to weaken the yen, displaying a well known rift between the two countries on currency intervention.
The U.S. currency got off to a steady start to the week against other major peers, with the dollar index remaining within striking distance of a two-month peak after markets last week moved to price in a greater chance of an imminent hike in U.S. interest rates. Emboldening dollar bulls, recent comments from Federal Reserve officials as well as minutes of the Fed's April meeting have convinced many analysts and investors that a rate hike in June or July is a real possibility.
The resurgent dollar has taken a heavy toll on commodity currencies, none more so than the Australian dollar which was further weighed by expectations of cuts in interest rates at home.
EUR/USD: during the Asian session the pair rose to $1.1240
GBP/USD: during the Asian session the pair rose to $1.4520
USD/JPY: during the Asian session the pair dropped to Y109.60
Based on Reuters materials
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