Japanese yen rises against US dollar, euro
The yen rose steadily against the euro and dollar on Tuesday as relief over Greece’s aid package turned to caution and as regional shares fell, prompting profit taking in both the euro and higher-yielding currencies.
The dollar fell to its lowest in two weeks as loss-cutting sell orders tripped at around 93.00 yen sending the dollar down 0.7 percent, with support expected at about 92.50-40 yen.
The euro, which tore higher on Monday on news of a rescue package for debt-laden Greece, shed more than 0.7 percent on the yen, as doubts returned about how and whether Athens uses the bailout fund and how it copes with its debt mound longer term. One trader cited model fund selling early as well.
Traders said the low-yielding yen, which tends to get bought back when investors turn cautious, was helped by a slide in share markets ahead of earnings from U.S. bellwether Intel (INTC.O) and a fall in U.S. Treasury yields.
“Speculation over China revaluing the yuan and softer regional stocks prompted investors to take profits in major currencies against the yen after their sharp gains,” said a trader at a Japanese bank.
“Also the market has turned back to being cautious about Greece and investors have bought back the yen against the euro and other crosses,” he said.
The dollar fell 0.6 percent to 92.65 yen, dipping as far as 92.57 yen with talk of stop loss orders above 92.50 yen helping push it down in attempt to trigger them.
The euro fell 0.7 percent to 125.84 yen, reversing all of Monday’s gains and coming back to fill a small gap on the daily chart just below 126.00 yen, which opened up between Friday’s high and Monday’s low.
Traders will be watching Greece’s sale of Treasury bills later to see investor appetite for its debt now.
“The auction results would be a litmus test as it’s the first sale after the announcement of the aid package for Greece,” said Mitsuru Sahara, chief manager for the currency derivatives trading department at Bank of Tokyo-Mitsubishi UFJ.
Some also said a report the Bank of Japan may slightly revise up its consumer price forecast for the next fiscal year when it issues its twice-yearly outlook report later this month helped the yen by reducing expectations it may ease policy again.
BOJ Governor Masaaki Shirakawa later said annual consumer price falls are expected to narrow as the output gap shrinks but also that the central bank did not rule out any policy option.
The euro eased 0.1 percent to $1.3574, well below a high above $1.3690 struck in the previous session.
Traders expect unwinding of euro short positions to support the single currency near term, but in the longer term many felt the bailout package was not a game-changer and that the currency would head lower in the next few months.
The market continues to watch for comments out of China on the yuan. President Hu Jintao told U.S. President Barack Obama Beijing would “firmly stick” to its own path for reforming the yuan’s exchange rate, the official Xinhua news agency said.
Hu added the yuan’s gains would neither balance Sino-U.S. trade, nor solve the U.S. unemployment problem.
The high-yielding Australian dollar shed 0.9 percent to 85.48 yen and eased 0.2 percent after failing to extend its gains from a five-month high near $0.9390 struck on Monday. Support was expected at $0.9220.
Source: Reuters