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The euro fell against the U.S. dollar and the yen Wednesday.
Written by article default Wednesday, 05 May 2010 10:53
Market OverviewThe euro fell against the U.S. dollar and the yen Wednesday in Asian trade, hit by concerns that the euro-zone sovereign debt crisis may not be contained by the latest bailout package announced for Greece.
At 0450 GMT, the euro was at JPY122.65, from JPY122.71. At the same time, the dollar traded at JPY94.73, up from JPY94.40 but still unable to breach the JPY95 resistance that has held for two days. Japanese markets remained closed Wednesday for the last day of the Golden Week holidays, and will reopen Thursday.
Most Asian currencies were dragged lower by the euro and tumbling stock markets Wednesday but remained within recent ranges, with the exception of the Indonesian rupiah and the Philippine peso.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 83.583, up from 83.306 late Tuesday.
The euro sank to fresh one-year lows against the dollar Wednesday as anti-austerity strikes in Greece and euro-zone debt contagion fears spooked the market. The single currency tumbled to a fresh one-year low of USD1.2980 on active cross selling in euro.
In the U.K., investors continue to fret about the possibility that Thursday's general election could result in a hung parliament. Cable moved narrowly in Asia but later tumbled to USD1.5090 before rebounding in US session.
The Australian dollar was weaker in Asia trading late Wednesday, plumbing four-week lows, while the market remained jittery awaiting more news on the Greek sovereign debt crisis as domestic concerns weighed on the pair, traders said.
Market expectation
Analysts said doubts about the Greek government's ability to carry out harsh austerity measures required by the EUR110 billion package, as well as concerns that Spain and Portugal may soon need an even bigger package, are likely to keep the euro under selling pressure in the short term.
Greece will continue to be the main focus, with thousands of public and private sector workers set to join a nationwide strike Wednesday to protest against the austerity measures the country needs to implement in return for its aid package, while the Greek parliament is expected to vote on those measures on Thursday. On Friday, European leaders will hold a summit to approve the bailout.
European stocks are expected to open in a cautious manner Wednesday, following weak U.S. and Asian leads, as investors question the viability of the Greek rescue package, amid fears that the debt crisis could spread to other vulnerable countries in Europe.
On the economic calendar, investors will turn to euro-zone services purchasing managers' index at 0800 GMT and retail sales at 0900 GMT. In the U.S., the ADP employment report is at 1215 GMT and non-manufacturing ISM is at 1400 GMT.