Currencies: Euro down against dollar, yen after staging rally

The euro fell against the dollar and the yen in Asia trade Tuesday, with some traders adjusting positions after the currency staged a rally overnight.

The euro EURUSD, +0.31%  was at $ 1.0920 from $ 1.0946 late Monday in New York. That compares with a high of $ 1.0972 overnight but still below $ 1.1037 soon after the outcome of the Federal Open Market Committee last week.

The common currency EURJPY, +0.13%  was also at ¥130.53 from ¥131.07.

“After rising for no particular reason yesterday, (the euro) inevitably met with selling as it came closer to $ 1.10,” said Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow. Also investors are showing less of an appetite to buy the euro around ¥131, he added.

The single currency extended its recent rebound overnight after the Federal Reserve’s policy statement indicated it intends to proceed cautiously on interest-rate rises, much less aggressive than many had expected.

“It is natural to see a rebound to this extent” after the rapid pace of decline in recent sessions, said Sakai.

WSJ market wrap: March 23, 2015

U.S. stocks edged higher Monday, extending last week’s gains, though the Nasdaq Composite pulled back from its 15-year high. Tenet Healthcare agreed to a deal that will hand it control of United Surgical Partners International.

Federal Reserve Vice-Chairman Stanley Fischer said Monday the U.S. central bank remains on track to raise short-term rates this year.

Fischer said once rates begin to rise, they could easily move “up and down” depending on how the economy performs.

Over the near term, the euro may get a boost from short covering triggered by possible strength in eurozone PMI data later today, said Takuya Kawabata, analyst at Gaitame.Com Research Institute.

“If the pair manages to surpass the $ 1.10-mark, further gains are possible,” said Kawabata, who expects the pair to move in a $ 1.080-$ 1.1070 range Tuesday. But if U.S. inflation data also scheduled later today shows a stronger-than-expected pace of inflation, that may reignite hopes for an early U.S. rate increase that would bring about a return to the dollar buying.

Elsewhere, the Australian dollar AUDJPY, -0.28%  briefly hit as low as ¥93.85 after weak Chinese manufacturing activity data. The Aussie was most recently at ¥93.97.

The preliminary gauge of Chinese manufacturing activity by HSBC Holdings PLC fell to 49.2 in March, from 50.7 in February. A figure below 50 indicates contraction.

The WSJ Dollar Index BUXX, -0.17% a measure of the dollar against a basket of major currencies, was up 0.11% at 86.86.

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