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The euro's rally against the dollar and the yen.
Written by article default Tuesday, 15 June 2010 20:59
Market OverviewThe euro's rally against the dollar and the yen ground to a halt in Asia Tuesday after touching a one-and-a-half-week high against the greenback overnight, as selling by Japanese exporters overwhelmed short-covering by speculators.
The common European currency fell to an intraday low of USD1.2195 during early Asian trading, compared with USD1.2225 in New York late Monday, before recovering some ground. The euro also briefly dropped to YEN111.58 from YEN111.81 in New York, although it later pared most of those losses.
At around 0530 GMT, the euro stood at USD1.2210 against the dollar and YEN111.79 against the yen.
The ICE Dollar Index, which tracks the U.S. currency against a trade-weighted basket of currencies, stood at 86.709 around 0500 GMT compared with 86.637 in New York Monday.
The U.K. pound posted gains of more than 1.3% against the dollar in U.S. trading, helped by the positive tone in markets and also a report by the newly formed U.K. Office for Budget Responsibility that cut net government borrowing forecasts for the year ending in March 2011, though it also revised downward growth projections.
The Australian dollar moved higher in Asia trade Tuesday on the back of firmer equities markets, shaking off more sovereign risk concerns out of Europe.
Market expectation
Traders are still alert for possible near-term gains in the euro, they continue to expect it to weaken over time due to concern over Europe's debt turmoil.
Some analysts expect the euro could fall to USD1.1900 for the rest of this month and thinks any rise above USD1.2400 is unlikely. They also see the single currency trading in a range of YEN108.00 to YEN113.00 with a downside bias by June 30.
European stocks are expected to open lower Tuesday as investors get a chance to react to Moody's downgrade of Greece's credit rating to junk status, which happened after the European close Monday.
The focus in the near-term is on Germany's June ZEW index of business expectations due later in the global day. Economists expect the index to decline to 42.5 from 45.8 in the previous month, weighed down by the continent's sovereign debt crisis.