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The yen fell against the dollar and euro in Asia Wednesday.
Written by article default Wednesday, 02 June 2010 10:24
Market OverviewThe yen fell against the dollar and euro in Asia Wednesday as short-term players sold the Japanese currency after the resignation of Japan's Prime Minister Yukio Hatoyama dented its safe-haven allure. The dollar rose to a two-week high of JPY91.78. At 0450 GMT, the dollar stood at JPY91.34, up from JPY91.11 late Tuesday in New York. The euro was at JPY111.48 from JPY111.44, after earlier marking a high at JPY112.50 following Hatoyama's announcement. The euro gave up its earlier gains as investors sold into the rise on lingering concern over debt woe contagion in the euro-zone. The common currency is also suffering from its own bout of political uncertainty, after Horst Kohler, the president of key euro-member Germany, stepped down Monday. Highlighting the currency's continued weakness, it was down at USD1.2205 against the dollar from USD1.2237 late Tuesday in New York. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the euro, was at 86.934 from 86.679. British Pound Surges to a 19-Month High against its Euro Counterpart. While the sterling would put in for a mixed performance against its most liquid counterparts Tuesday, the most remarkable move was the EURGBP’s drive below a long-term support level at 0.84. This is a sign that the UK is not simply being grouped with the EU and an inherent confidence was building behind the new British government’s effort to stabilize the country’s financial position. At 0450 GMT, the pound traded hands at USD1.4687, up from USD1.4647 late Tuesday in New York. The Australian dollar continued its path lower in volatile trade in Asia due mainly to weaker commodity prices and ongoing investor nervousness about the outlook for global growth.
Market Expectation
Analysts said that US dollar could climb as high as JPY93.00 before the weekend, due in part to speculation that the political changes could mean less government tolerance of yen strength. European stocks are expected to start sharply lower Wednesday, following declines in Asia and on Wall Street, as doubts about the stability of the euro zone continue. Analysts said GBPUSD further gains would likely be limited by lingering concerns over the U.K.'s economic recovery. AUDJPY down may test 10-month low of 71.89 (marked on May 21) in coming weeks, vs 75.80 last, say traders. Weak share market, EUR's weakness due to worries over European debt issues may continue to weigh on other risk-sensitive, high-yielding units.