Euro Down Against Dollar, Yen After Staging Rally

By Hiroyuki Kachi

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.

Around 0450 GMT, the euro 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 was also at Y130.68 from Y131.07.

“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 Y131, he said 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 Mr. Sakai.

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

Mr. 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 Mr. 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 briefly hit as low as Y93.85 after weak Chinese manufacturing activity data. The Aussie then stabilized at Y94.10 later in the session.

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, a measure of the dollar against a basket of major currencies, was up 0.11% at 86.86.

 Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT                             Latest       Previous   %Chg    Daily    Daily   %Chg Dollar Rates                               Close            High      Low  12/31  USD/JPY Japan           119.70-71      119.72-73  -0.01   119.85   119.59  -0.01 EUR/USD Euro            1.0920-23      1.0945-48  -0.23   1.0968   1.0905  -9.73 GBP/USD U.K.            1.4940-45      1.4951-56  -0.07   1.4976   1.4921  -4.08 USD/CHF Switzerland     0.9679-83      0.9659-63  +0.21   0.9696   0.9646  -2.64 USD/CAD Canada          1.2528-33      1.2520-25  +0.06   1.2549   1.2504  +7.82 AUD/USD Australia       0.7856-60      0.7878-82  -0.28   0.7903   0.7839  -3.83 NZD/USD New Zealand     0.7649-55      0.7650-56  -0.01   0.7675   0.7628  -1.83  Euro Rate  EUR/JPY Japan           130.70-74      131.03-07  -0.25   131.20   130.62  -9.81 Source: ICAP PLC  

Write to Hiroyuki Kachi at [email protected]

    (END) Dow Jones Newswires   03-24-150138ET   Copyright (c) 2015 Dow Jones & Company, Inc. 

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