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The euro got a respite from its falls against the yen in Asia Friday.
Written by article default Friday, 14 May 2010 11:32
Market OverviewThe euro got a respite from its falls against the yen in Asia Friday as Japanese institutional investors picked up the unit cheaply, but traders said the single currency may come under renewed selling pressure next week as a wider array of investors look to cut their risk exposure.
At 0450 GMT in Tokyo, the euro stood at YEN116.54, up from YEN116.13 late Thursday in New York. Although Japanese exporters had sold the euro for the yen earlier in the morning, Japanese institutional investors later took advantage of the lower prices to push the unit back up, dealers said. The dollar also drew attention from bargain hunters, rising to YEN92.91 from YEN92.68 Thursday.
Meanwhile, bargain hunting also helped the euro against the dollar Friday. The common currency stood at USD1.2543, up slightly from USD1.2531 late Thursday in New York. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the euro, was down at 85.342 compared with 85.371.
Sterling, while steady on Friday, also is seen under pressure following the release of weaker-than-expected U.K. trade data, with investors worried about persistent low growth as spending cuts loom. Data showed exports suffered in March, despite the decline in the pound over the past several months. Risk aversion as a result favors the dollar over the pound.
The Australian dollar fell in Asia trade Friday and bond prices rose as traders remained concerned about the European Union's response to the Greece debt crisis, which fueled risk aversion in markets across the globe.
Market expectation
Major currency pairs are mixed Friday, while traders continue to take a longer-term bearish stance against the euro.
European players coming online sell GBPUSD, GBPYEN on lingering concern over U.K. fiscal, economic outlook. Analysts say key support for GBPUSD at USD1.4475 vs USD1.4602, for GBPYEN is YEN130.00, both near lows for year marked recently.
Dealers said further bargain hunting could push the euro and dollar slightly higher later Friday if investors in Europe and the U.S. get behind the buying by reversing short-term bets against the currencies. The dollar could rise to YEN93.65 by the end of the global day, while the euro could climb to YEN118.75, said analysts.
But dealers said the outlook for the euro is bleak for the foreseeable future, as investors remain wary of holding the currency, which they think could soon tumble again on concern over Europe's sovereign debt and economic problems.
EURCHF may decline further in the near term; it should stabilize around the 1.37 level, say major banks.