Monday May 18, 2009 - 11:21:56 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dlr up vs euro; yen falls on vice finmin comment
* Dollar gains vs euro as European recession weighs
* Yen falls as Japan vice finmin says watching FX moves
* Rises in equities, oil boost the likes of Aussie, sterling
(Updates prices, adds quotes)
By Jessica Mortimer
LONDON, May 18 (Reuters) - The euro fell on Monday, still
suffering from data on Friday showing Europe's recession was
worse than earlier thought, while the dollar fell against other
currencies seen as higher-risk.
The yen fell broadly after Japan's top finance ministry
bureaucrat Kazuyuki Sugimoto said he was watching foreign
exchange market moves carefully and that he hoped they would not
have a negative effect on the economy. [ID:nTKF104381].
The news served as a reminder to the market of the risk of
Japanese authorities looking to intervene to weaken the Japanese
currency if it strengthens too sharply, although any action
beyond verbal intervention is viewed as unlikely, analysts said.
The euro stayed under pressure against the dollar after
figures on Friday showed a bigger-than-expected contraction in
the euro zone economy.
However, a recovery in European share prices from earlier
falls .FTEU3, rises in U.S. stock futures SPc1DJc1 and
gains in oil prices CLc1 pushed the dollar lower against some
currencies seen as higher risk such as sterling and the
"The most interesting move has been in the yen, which has
been coincident with gains in commodities and equities,"
Barclays Capital currency strategist Adarsh Sinha said.
"Japan expressing concerns about yen appreciation is also
behind the yen's falls," he added.
He said the euro had taken some support from European
Central Bank Governing Council member Axel Weber reiterating
that interest rates at 1 percent were appropriate unless the
situation got noticeably worse. [ID:nLI369963]
At 1026 GMT, the euro fell 0.2 percent against the dollar to
Against the yen, it gained 0.4 percent to 128.85 yen
<EURJPY=>, having hit a session high around 129.22 yen, while
the dollar rose 0.6 percent to 95.70 yen <JPY=>, a shade below a
session high around 95.91 yen.
In early Monday trade, the dollar had hit a two-month low of
94.55 yen on trading platform EBS, while the euro rose to a new
3-week peak of 126.99 yen.
Sterling gained 0.5 percent to $1.5236 <GBP=>, as investors
brushed off calls for a dissolution of parliament in a latest
twist in an expenses scandal involving British lawmakers, as the
possibility of a general election seemed slim. [ID:nLI275595]
Gains in oil prices helped the higher-yielding and
commodity-based Australian dollar jump nearly 1 percent to
On a quiet day for data meanwhile, uncertainties over
whether the extent and sustainability of any tentative recovery
in the global economy lingered at the back of investors' minds,
A nascent recovery in equities and riskier assets recently
came to a halt as investors questioned just how sustainable any
recovery in the global economy will be.
With that in mind, market participants will watch Tuesday's
German ZEW economic sentiment indicator closely, as well as
provisional purchasing managers' indices for the euro zone later
in the week.
"The world economy is in a very uncertain mode,",
Stockholm-based SEB currency strategist Johan Javeus said.
"Right now it is difficult for the market to choose which leg to
The yen may also be hit by concerns about the severity of
the weakness in Japan's economy remain ahead of Japanese
industrial output and gross domestic product data due later in
the week, analysts said.
The Reuters Tankan survey overnight showed confidence among
Japanese manufacturers edged up from record low levels,
providing some hope that the battered economy may have reached a
trough in the first quarter. [ID:nT139768].
There was also some relief as Moody's ratings agency said on
Monday it was raising Japan's yen-denominated Japanese
government bonds by a notch to Aa2 from Aa3. This news was
offset by a downgrade to its foreign currency bond rating to Aa2
from AAA, unifying the two ratings.
(Reporting by Jessica Mortimer; editing by Patrick Graham)
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