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The euro rose against the yen and dollar in Asia Tuesday.
Written by article default Tuesday, 08 June 2010 13:14
Market OverviewThe euro rose against the yen and dollar in Asia Tuesday as rallying regional equities prompted short-term investors to scoop up the risk-sensitive common currency, though lingering concern over European debt woes will likely limit further rises, dealers said.
The respite in the euro's recent falls came as Asian bourses strengthened, bucking expectations for weakness after the Dow Jones Industrial Average closed down 1.2%. In early afternoon trade, Japan's benchmark Nikkei Stock Average was up 0.34%.
The euro was also helped after U.S. Federal Reserve Chairman Ben Bernanke said that consumer spending and investment are showing "good momentum." The cautious assessment that the U.S. economy is likely to continue recovering reassured investors anxious that European debt woes could rock the global economy, dealers said.
At 0450 GMT, the euro stood at YEN109.58 up from YEN109.04 late Monday in New York, and at USD1.1959 from USD1.1917.
Elsewhere, the dollar traded hands at YEN91.64, little changed from YEN91.60 late Monday in New York. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the yen and euro, was at 88.273 compared with 88.500.
The Pound was beholden to market sentiment off in Asia before rebounding in the Europe above USD1.4500. The market then eased back for the rest of the day as US stocks turned negative. EURGBP pushed up towards 0.8300 before resuming its downtrend and hitting fresh year lows just above 0.8200.
The Australian dollar was higher in Asian trade Tuesday as regional equity markets recovered lost ground and as markets were buoyed by upbeat comments from policy makers.
Market expectation
The euro regained some lost ground against the U.S. dollar Tuesday, but analysts warned of the potential for further weakness in the euro as investors continue to lack confidence in the single currency amid continued uncertainty surrounding Europe's debt troubles.
European stocks are expected to open lower Tuesday, with losses on Wall Street adding downward pressure amid continuing concerns about the sovereign-debt situation in the region.
Still, soothing comments from Ben Bernanke, chairman of the Federal Reserve, that the U.S. economy's recovery remains on track, and healthy gains in Asian markets, are expected to offer European bourses some support.
If European and U.S. share markets also bounce back, the euro could extend its gains slightly, dealers said.
But in the coming weeks, lingering concerns over further contagion of euro-zone debt problems is likely to keep strong downward pressure on the common currency. Moreover, investors would likely refrain from buying back the euro aggressively given how sharply it has moved recently, traders said.