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The euro fell against the yen and dollar in Asia Tuesday.
Written by article default Tuesday, 11 May 2010 11:01
Market OverviewThe euro fell against the yen and dollar in Asia Tuesday as bank dealers and short-term investors sold the common currency amid the continued threat of more credit rating downgrades to fiscally troubled euro-zone members despite a massive bailout plan announced earlier in the week.
Investors in Asia reacted to that news Tuesday by selling the euro against the yen and dollar to lock in profits after the common currency rose Monday, dealers said. The euro had risen at the start of the week as investors bought it after the European Union and International Monetary Fund announced an aid package worth nearly USD1 trillion for troubled euro-members. But dealers said the investors had only been buying the euro for short-term gains, and that their selling Tuesday was a sign that they did not expect any further boost from the bailout.
At 0450 GMT, the euro traded hands at YEN117.97 compared with JPY119.00 late Monday in New York.
In the U.K., sterling is lower against major rivals Tuesday, after the post-election wrangling took a big turn when Prime Minister Gordon Brown said he would step down as leader of the Labour Party no later than September. He also said that Labour and the Liberal Democrats had started official talks on a potential coalition deal.
The Australian dollar slid in Asia trade Tuesday, with technical factors and little follow-through gains for Asian equities weighing on the local currency.
Market expectation
The euro is struggling Tuesday, down slightly against the dollar and yen as investors take a second look at the euro zone's rescue plan.
The risk-sensitive currency may fall again if global equities weaken further, after many share markets in Asia slumped Tuesday, dealers said.
Moody's Investors Service Inc. said overnight that it will likely make a "substantial" change to Greece's A3 credit rating in the coming four weeks.
The euro could fall to YEN117.00 and USD1.2600 later in the global day, said analysts.
Other dealers and analysts said the common currency will likely face further selling pressure due to lingering concerns over sovereign debt contagion in the euro-zone.
USDJPY remains top heavy as Asian bank dealers, short-term players in region continue to sell pair to lock in gains following rise Monday, say analysts.