Dollar And Yen Weaken On Renewed Risk-sentiment
April 12 2012 - 3:36AM
RTTF2
The US dollar and the Japanese yen fell against their major
rivals in late Asian deals Thursday as traders bought risk
associated assets in the wake of some positive news in the
market.
The latest bull wave was driven by a warm kick start of earning
season with Alcoa posting a surprise profit in the first quarter.
Easing bond yields in Spain and Italy and an upbeat jobs data from
Australia also supported the risk-sentiment.
The Federal Reserve's latest Beige Book revealed that the U.S.
economic recovery proceeded at a modest pace in recent months, as
manufacturers expressed optimism despite concerns about higher
energy prices.
Consumer spending was "encouraging" across a number of the Fed's
twelve districts, according to the Beige Book, which gathers
anecdotal information on current economic conditions.
European Central Bank Executive Board member Benoit Coeure
helped alleviate some recent investor concerns about Europe's debt
problems by saying that the ECB will revive its bond-purchase
program to lower Spain's borrowing costs.
Although the risk-sentiment regained, the undertone remains
cautious due to concerns over a cooling Chinese economy and slowing
jobs growth in the United States.
Traders also await for Google's earnings results due later in
the global day, which could offer more clues into whether firms
were able to sustain their profit momentum despite rising
costs.
The World Bank today lowered China's growth estimate for 2012 to
8.2 percent from 8.4 percent and said that the prospects for a
gradual adjustment of growth remain high.
Meanwhile, the Bank of Japan Governor Masaaki Shirakawa said
that the central bank will continue powerful monetary easing and
warned that uncertainty over global economy still remained
high.
In a speech at a quarterly meeting of the central bank's
regional branch managers, Shirakawa said the BoJ will pursue
powerful easing to help the economy overcome deflation and return
to a sustainable growth path.
The Australian Bureau of Statistics said that employment rose by
44,000 from a month earlier to 11.5 million. This was nearly seven
times the economists' expectations of an increase of 6,500.
Moreover, the March gain reversed a fall in employment of 15,400 in
February.
The dollar reached as far as yesterday's 8-day low of 1.5940
against the pound around 2:45 am ET and the pair has been hovering
in that level since then.
The greenback reached 1.3151 against the euro, a few pips short
of yesterday's new multi-day lows. The pair is staying around the
1.3140/50 level with 1.3290/1.33 seen as the next likely target
area.
The dollar also slipped to 0.9146 against the Swiss franc around
2:10 am ET and the pair held steady thereafter. On the downside,
the greenback may find target around the 0.9130 level.
Snapping back from yesterday's pivotal support of 80.60, the US
currency advanced to a 2-day high of 81.14 against the yen around
3:15 am ET. On the upside, the greenback may find target around the
81.70 level.
The lower-yielding yen also fell across the board in late Asian
deals Thursday, hitting 2-day lows of 129.26 against the pound,
84.38 against the Australian dollar, 66.70 versus the New Zealand
dollar and 81.15 against the Canadian dollar around 3:15 am ET.
The Japanese currency also declined to 106.62 against the euro
and 88.70 against the Swiss franc by 3:20 am ET. On the downside,
the yen may find support levels at 91.15 against the franc and
107.60 against the euro.
Looking ahead, European Central Bank monthly report, U.K. trade
data and the Eurozone industrial production - both for February are
slated for release in the European session.
The U.S. PPI for March, trade data for February, weekly jobless
claims for the week ended April 07, Canada's trade data and new
housing price index for February are expected in the New York
morning session.
Investors also await Italian government bond auction results
later in the day.
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