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The euro fell against the U.S. dollar and yen Monday.
Written by article default Monday, 03 May 2010 10:27
Market OverviewThe euro fell against the U.S. dollar and yen Monday in Asian trade amid worries that a EUR110 billion bailout package for Greece, announced over the weekend, may still find hurdles later this week.
The euro also fell against the Japanese yen, and last traded at JPY124.27 from JPY124.69 late Friday, but remained above key support levels of around JPY123 and JPY121.
Against the dollar, the yen traded at JPY93.94 from JPY93.81.
The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 82.216 from 81.866.
EURUSD has edged higher from the levels seen in Asia overnight, but remains weaker than the levels seen in NY Friday. Negotiations have concluded between the IMF, the EU, the ECB and Greece on the terms of a three year economic and financial adjustment program. EURUSD stands at USD1.3236, from USD1.3224 in Asia, but USD1.3313 in NY late Friday. Also volumes will be light Monday with the UK on holiday.
The Pound fell against the US dollar and a broadly firmer euro on growing optimism a multi-billion euro aid package aimed at avoiding a Greek default may be announced in the coming days. Although the pound had been pressured over the upcoming government election, the possibility that next week's UK election may provide a majority government were tempered by wider fiscal concerns.
The Australian dollar was lower in Asia on Monday as local mining stocks sold off in response to a proposed mining tax while bond futures fell on a new rescue package for Greece.
Market expectation
A possible split between countries in favor of the bailout like France, and those against like Germany, may also be a euro negative, analysts said, ahead of a key vote on the bailout by Germany's parliament May 7 just before an important regional election there May 9.
Even if the euro manages a relief rally later this week on the bailout news, its mid-term picture remains clouded by concerns that other fiscally weakened euro-zone members, including Portugal and Spain, may also need financial support in coming months or years, other analysts said.
Japan's markets will remain closed through Wednesday due to the Golden Week. Many international markets, including the U.K., are closed Monday for May Day.
In Australia the main focus for currency and bond traders now is Tuesday's monthly meeting of the Reserve Bank of Australia at which a majority of analysts expect policy makers to tighten the overnight cash rate by another 25 basis points to 4.50%.