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The dollar and euro ticked down against the yen in Asia Tuesday.
Written by article default Tuesday, 27 April 2010 10:34
Market Overview
The dollar and euro ticked down against the yen in Asia Tuesday as disorderly Tokyo share price moves prompted non-Japanese hedge funds to buy the safe-haven yen, while Japanese exporters sold the two units for their month-end settlement.
Non-Japanese hedge funds used declines in Tokyo and Shanghai stocks as cues to sell the dollar and euro versus the safe-haven yen, dealers said. Japan's benchmark Nikkei 225 Stock Average was down 0.1% in the afternoon in Tokyo, while the Shanghai Composite Index fell 2.1%. But the currency market remained largely quiet as players await the outcome of the two-day meeting of the Federal Open Market Committee, ending Wednesday, dealers said.
As of 0450 GMT, the dollar stood at YEN93.91, slightly down from YEN94.01 in New York late Monday. The euro was traded at YEN125.66 compared with YEN125.68.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 81.307, from 81.414 in New York Monday.
The Euro rebounded to USD1.3398 in Asian morning, the pair dropped from there and tumbled to USD1.3291 in European morning on renewed worries over Greece as investors concerned about the potential conditions linked to the loan offered to Greece as German Chancellor Merkel said Greece must show it can return to sustainable economic path and further savings measures needed from Greece.
The Pound was the strongest currency on the day as UK house Prices jumped 1.8% y/y in April and 0.2% m/m and inspired a test of USD1.5500. EURGBP tested 0.8600 as the height of the Euro's concerns but rebounded aggressively later in the US session.
AUDUSD traded 0.9251 after German Chancellor Angela Merkel yesterday said she won’t release Greek rescue funds until the country shows it’s got a “sustainable, credible” plan to cut its budget deficit.
Market expectation
The dollar may gain ground against the yen if U.S. home price and consumer confidence data, due later in the day, brighten the economic outlook and push U.S. Treasury yields higher. The euro, however, may extend its losses if any negative news about the euro-zone's fiscal problem pops up.
But the dollar's further rise could be limited before the outcome of the two-day FOMC meeting Wednesday. In addition, Japanese exporters' expected selling ahead of the nation's Golden Week holidays, starting Thursday, may hamper more gains in the dollar above the JPY94.50 in coming days, dealers said.
In the near-term, the euro's upside prospects appear dim with falls to YEN124.00 and USD1.3200 possible, traders said.
The pound could get some further support later if March mortgage approval figures from British Bankers' Association show further improvement in the housing sector, say traders.
Technical bounce has AUDUSD paring part of morning losses, but cross likely to remain volatile as situation in Europe continues to unfold, says analysts.