Euro Gaining Ground as Policymakers Get their Act Together
by Jonathan Millet
USD weighed down by profit taking
The USD was hit by an intraday low against the yen at 87.23, as most traders booked profits soon after the greenback’s recent rally. It had earlier briefly risen to 87.79 yen in the wake of the Japanese finance minister’s remarks, but later went down.
Most analysts and traders agree that the USD is due for a pullback against the yen.
On the other hand, the euro was steady against the dollar at $1.3124, which is above a three week low of $1.2998 set on Friday.
Experts however, believe that the USD is poised for a stronger recover very soon.
EURO climbs above 1.31
The euro had climbed higher overnight after a general feeling that the sentiment among traders and economists for the possibility of an ECB rate cut was not so strong at present, as it was a few days earlier. A recent poll concluded that out of 73 polled, 67 agreed that the ECB will make no changes in their rates policy in the meeting scheduled to be held on Thursday.
The euro climbed to its 1.31 handle and looked comfortable enough though it is expected to decline from its height of 1.3140 soon after the trading starts in North America.
Moreover, the euro remained flat against the dollar, just ahead of the various economic data that is expected to be released shortly.
The EUR traded at $1.3122 against the USD.
Japanese Yen rises against other major currencies
The Japanese yen rose against its rivals on Tuesday as soon as the new government of Japan announced that it would buy the Eurozone bailout bonds in its endeavors to weaken the yen.
The dollar and the euro declined against the yen as Japan’s new Finance Minister, Mr. Taro Aso announced the Government’s plans to buy the bonds that were issued by the European Stability Mechanism (ESM), which is Europe’s fresh and new bailout fund, with the plea that if Europe becomes stable, than it would help to bring in stability to the foreign exchange market.
Earlier, the new government of Japan had made a weaker yen its key issue.
Crude oil wavers between small gains and losses before release of US data
Crude oil hovered just below its four month high in the morning hours of Tuesday, wavering between small gains and losses just before the release of US data on oil supplies.
Overall, the main focus has remained on the economic outlook of the US and how policymakers will be able to deal with the debate on the debt ceiling.
On the New York Mercantile Exchange, light sweet crude futures traded at $93.12 a barrel during U.S. morning trade, down 0.1% on the day.
In New York, oil prices traded between $93.00 a barrel, the daily low and a session high of $93.80 a barrel. Oil futures had earlier reached $93.82 a barrel on January 2, which is the strongest level since September 19.