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The U.S. dollar edged lower against most of its currency rivals Wednesday.
Written by article default Wednesday, 28 April 2010 09:48
Market OverviewThe U.S. dollar edged lower against most of its currency rivals Wednesday in Asia, giving back some of the gains it saw in North American trading as Asian markets digested the news of downgrades to Greece's and Portugal's sovereign ratings.
The dollar index (DXY) fell to 82.162 from 82.293 late Tuesday in North American trading.
Asian currencies opened lower Wednesday, as traders said jitters on Greece's downgrade should lead to consolidation moves and profit-taking after recent rallies drove the likes of the Korean won and the Singapore dollar to multi-month highs just days earlier.
The dollar bought YEN93.15, down from YEN93.25. The EURYEN bought YEN122.98 versus YEN122.89 late Tuesday in North American trading.
The euro slumped to a low of USD1.3144 in early Asian trade, the lowest in more than a year, as investors bailed out of riskier assets. The single currency has since recovered modestly, but remains vulnerable. At 0625 GMT, the euro was fetching USD1.3215, up from USD1.3175 late in New York Tuesday.
The U.K. pound was at YEN142.37 and USD1.5278 from YEN142.14 and USD1.5253 respectively late Tuesday.
The Australian Dollar (AUD) came under pressure as the risk sensitive currency was sold with stock markets. AUDYEN tested JPY85 but when this held the pair recovered into the US session close. Ongoing European concerns may affect the RBA rate decision next Tuesday, especially if the stock markets continue to fall.
Market expectation
The euro may fall to USD1.3130 and YEN122.00 in the Asian session as regional shares were sharply lower after the Dow Jones Industrial Average closed down 1.9% overnight, dealers said.
In the near term, the euro may extend its losses to USD1.3000 and USD120.00 if any negative news about Greek debt issues emerges, reinforcing the view that the euro-zone debt problem may persist for a while, traders said.
On Wednesday, news about Greece will watched carefully but, with the economic calendar light, investors will also be watching for the Federal Open Market Committee rate announcement, due after the European close at 1815 GMT. While the Federal Reserve is expected to leave U.S. interest rates on hold, investors will watch for any indications of a possible rate hike in the coming quarters, while they scrutinize the Fed's comments on the U.S. recovery.
European stocks are expected to fall further Wednesday, with overnight losses in U.S. and Asian markets adding to the downside pressure on European equities following renewed fears about Greece's debt problem and uncertainties about whether the European Union and International Monetary Fund can find a solution.