The U.S. Dollar came under pressure again as Ben Bernanke, the head of the U.S. Federal Reserve Bank, signaled that monetary policy would continue to remain accommodative, giving rise to renewed hopes of more easing. The U.S. Dollar Index, which measures the greenback’s value versus a weighted basket of currencies, slipped to 78.870 .DXY in the overnight hours before recovering slightly to 78.954. The Euro benefitted from those comments, along with improved business sentiment in Germany, and traded at a 1-month high yesterday on the EBS trading platform. Currently, the EUR/USD pair is trading at $1.3348, down 0.1% from the $1.3368 peak struck yesterday; resistance is seen near $1.3373.
One trader in Japan said that the outcome of the next U.S. Treasuries auction would be critical to the Dollar’s direction; if Treasuries’ buying gains momentum, resulting in a fall in bond yields, the U.S. Dollar could weaken further especially against commodity-linked currencies.
Mr. Bernanke commented that the employment situation, though improved over the last several months, was the reason that the central bank intended to hold onto its dovish stanch, which includes ultra low interest rates for an extended period. His argued was that the improvement in the unemployment situation was not structural but rather cyclical, suggesting that it could turn around at any time.
One trader in Japan said that the outcome of the next U.S. Treasuries auction would be critical to the Dollar’s direction; if Treasuries’ buying gains momentum, resulting in a fall in bond yields, the U.S. Dollar could weaken further especially against commodity-linked currencies.
Mr. Bernanke commented that the employment situation, though improved over the last several months, was the reason that the central bank intended to hold onto its dovish stanch, which includes ultra low interest rates for an extended period. His argued was that the improvement in the unemployment situation was not structural but rather cyclical, suggesting that it could turn around at any time.
As the fiscal year end approaches in Japan, the Yen inched higher versus the U.S. Dollar and broadly against other currencies, supported by Japanese exporters opening long positions in the currency. As reported at 1:22 p.m. (JST) in Tokyo, the USD/JPY pair slipped 0.4% to trade at 82.86 Yen, well off the 11-month peak o 84.187 which was hit earlier in the month. Meanwhile the EUR/JPY pair lost 0.3% to 110.46 Yen, off the 4½-month peak of 111.43 Yen struck last week on the EBS trading platform. Traditionally, Yen buying picks up steam at any month end, but given that the year end for many Japanese firms coincides with that the activity has been higher.
Analysts believe that the current accommodative policies set by many of the world’s central banks are leading to an increase in investors’ risk appetite, and that could further encourage investors to use the low-yielding Yen for carry trade transactions. This week, Federal Reserve Chairman Ben Bernanke signaled the bank’s intent to maintain an accommodative monetary policy as he says the U.S. recovery remains fragile; that has led to the softening of the U.S. Dollar, but other safe-haven currencies are also feeling the pressure from the fallout.
Analysts believe that the current accommodative policies set by many of the world’s central banks are leading to an increase in investors’ risk appetite, and that could further encourage investors to use the low-yielding Yen for carry trade transactions. This week, Federal Reserve Chairman Ben Bernanke signaled the bank’s intent to maintain an accommodative monetary policy as he says the U.S. recovery remains fragile; that has led to the softening of the U.S. Dollar, but other safe-haven currencies are also feeling the pressure from the fallout.
The Japanese Yen firmed broadly earlier today but analysts believe it could still be under some buying pressure as Japan’s fiscal year end approaches. As reported at 12:43 p.m. (JST) in Tokyo the USD/JPY pair was trading higher at 82.59 Yen off the session low, 82.54 Yen and slightly off the Tuesday peak of 83.38 Yen. The Yen’s broad advance was primarily driven by gains against the Australian Dollar, which weakened the most among the Yen’s major rivals, with the AUD/JPY trading at 85.65 Yen, a decline of 0.6%. The Aussie Dollar has been under broad pressure lately, on the back of news that China’s economy is slowing more than expected and the possibility of a “hard landing” now seen as a real worry.
The Australian Dollar also lost more ground against the U.S. Dollar, trading at $1.0367, a decline of 0.3% on the day, and well below Tuesday’s high of $1.0557. Analysts don’t foresee any improvement in the Australian currency unless and until there is some confirmation from the Chinese government that the economy there is not weakening to the extent that global markets believe; Chinese PMI data to be released on Sunday could affirm that.
The Australian Dollar also lost more ground against the U.S. Dollar, trading at $1.0367, a decline of 0.3% on the day, and well below Tuesday’s high of $1.0557. Analysts don’t foresee any improvement in the Australian currency unless and until there is some confirmation from the Chinese government that the economy there is not weakening to the extent that global markets believe; Chinese PMI data to be released on Sunday could affirm that.
The Yen’s rising momentum seems finally to have faded, but before it did the Japanese currency briefly struck a 3-week peak against the U.S. Dollar, pushed higher by speculators who had hoped that exporters’ repatriations flows would give a bigger boost to the Yen. As reported at 1:13 p.m. (JST) in Tokyo, the USD/JPY pair retreated to 82.10 Yen after it briefly touched on 81.83 Yen. One senior trader in Japan said that several speculators were caught flat footed as the exporter buying was less robust than they had anticipated. Despite the Yen’s recent brief rise, it is still down nearly 7% on the greenback since the Bank of Japan’s surprising interventionist moves a month ago.
Improving data for the U.S. economy and a relative sense of calm in the Eurozone also are offering support to the greenback, and some strategists anticipate that the Dollar could continue to rise against the Japanese Yen over the next several months, albeit at a slower pace.
Markets focus will likely turn to Europe today ahead off the next meeting of the Eurozone’s finance ministers. The EUR/USD pair surged more than 0.4% to trade at $1.3360. Earlier in the week, following U.S. Fed chief Ben Bernanke’s dovish commentary, the Euro was trading at some of the highest levels in nearly a month.
Improving data for the U.S. economy and a relative sense of calm in the Eurozone also are offering support to the greenback, and some strategists anticipate that the Dollar could continue to rise against the Japanese Yen over the next several months, albeit at a slower pace.
Markets focus will likely turn to Europe today ahead off the next meeting of the Eurozone’s finance ministers. The EUR/USD pair surged more than 0.4% to trade at $1.3360. Earlier in the week, following U.S. Fed chief Ben Bernanke’s dovish commentary, the Euro was trading at some of the highest levels in nearly a month.
The Japanese Yen, considered among the best of the safe haven currencies, eased back in Asian trading today following the several days uptrend as a result of the Japanese fiscal year end. As reported at 12:40 p.m. (JST) in Tokyo, the Yen was trading against the U.S. Dollar at 83.16 Yen, a fall of 0.4% from Friday’s trade and well off the 3-week peak of 81.83 Yen which was also struck on Friday. Against the Euro, the Yen was trading at 110.94 Yen, a fall of 0.3% not far from the multi-month low of 111.43 Yen struck on March 21st. The Yen also fell against the Australian Dollar, trading at 86.44 Yen and well off last week’s high of 84.60 Yen.
News that business sentiment among the largest of Japan’s manufacturers was unexpectedly weaker also put pressure on the currency. That suggests to a few analysts that the Bank of Japan might have to consider additional easing measures to further spur the economy; the central bank has two meetings scheduled for the month of April. Some market players expect that now that repatriated fund worries have been reduced with the passing of the fiscal year that the USD/JPY will continue its rise to 85 Yen within the next three months.
News that business sentiment among the largest of Japan’s manufacturers was unexpectedly weaker also put pressure on the currency. That suggests to a few analysts that the Bank of Japan might have to consider additional easing measures to further spur the economy; the central bank has two meetings scheduled for the month of April. Some market players expect that now that repatriated fund worries have been reduced with the passing of the fiscal year that the USD/JPY will continue its rise to 85 Yen within the next three months.
The Euro fell broadly in Asian trading as the repercussions of yesterday’s less than impressive jobs and manufacturing data continue to take its toll. The EUR/USD pair touched on a low of $1.3278 yesterday, but was able to recoup some of those losses and inched back to $1.3344, a gain of 0.2%. According to Eurostat’s data, Eurozone unemployment crept higher to 10.8% from 10.7%, though that was in line with analysts’ expectations. The PMI readings for Germany and the broader Eurozone issued by Markit Economics showed a contraction from the previous period but for Germany at least were slightly better than forecast. In contrast, China earlier saw a marked improvement in the reading, an the U.S. ISM manufacturing data was better than expected.
The Australian Dollar had edged higher against the U.S. Dollar ahead of the Reserve Bank of Australia’s interest rate decision, which ultimately decided against any movement of the rate which has been at 4.25% for the past several months. Markets had been pricing in the possibility of a rate cut, with the most recent odds a 1 in 3 chance, but a unanimous poll of economists did not foresee any movement at this time. As reported at 12:51 p.m. (JST), the AUD/USD pair was trading 0.3% higher at $1.0444, a gain of 0.3%.
The Australian Dollar had edged higher against the U.S. Dollar ahead of the Reserve Bank of Australia’s interest rate decision, which ultimately decided against any movement of the rate which has been at 4.25% for the past several months. Markets had been pricing in the possibility of a rate cut, with the most recent odds a 1 in 3 chance, but a unanimous poll of economists did not foresee any movement at this time. As reported at 12:51 p.m. (JST), the AUD/USD pair was trading 0.3% higher at $1.0444, a gain of 0.3%.
The Australian Dollar struck an 11-week trough against the U.S. Dollar following an unexpected outcome in balance of trade figures. According to expectations, Australia was to have posted an AUD1 billion surplus in February but the data revealed in fact that a trade deficit in the amount of AUD480 billion was posted rather, news that supports the strong probability that the Reserve Bank of Australia might now have to consider a rate cut at next month’s meeting. Earlier this week, the RBA left their monetary policy unchanged, with the benchmark cash rate fixed at 4.25%; the statement which accompanied the announcement said that the central bank would monitor the economic situation closely and be ready to act.
As reported at 12:57 p.m. (JST) in Tokyo, the AUD/USD pair was trading at a low of $1.0263, the lowest price since mid-January, before recovering to $1.0279 – still a 0.5% decline from late trade in New York. Analysts believe that if the pair drops to below $1.0261, the next support could be at $1.0120.
The fall in the Aussie had a spillover effect on the Euro which slipped to $1.3184, before recovering to $1.3196 still a decline of 0.3%. Analysts say that markets are extremely sensitive to any signs of additional easing, and yesterday’s comments by a U.S. Federal Reserve Bank official disappointed markets which had been hopeful for more hints on additional stimulus. The ECB will hold their monthly meeting today and analysts expect that there will be no changes there to monetary policy.
As reported at 12:57 p.m. (JST) in Tokyo, the AUD/USD pair was trading at a low of $1.0263, the lowest price since mid-January, before recovering to $1.0279 – still a 0.5% decline from late trade in New York. Analysts believe that if the pair drops to below $1.0261, the next support could be at $1.0120.
The fall in the Aussie had a spillover effect on the Euro which slipped to $1.3184, before recovering to $1.3196 still a decline of 0.3%. Analysts say that markets are extremely sensitive to any signs of additional easing, and yesterday’s comments by a U.S. Federal Reserve Bank official disappointed markets which had been hopeful for more hints on additional stimulus. The ECB will hold their monthly meeting today and analysts expect that there will be no changes there to monetary policy.
