WORLD FOREX: Euro Falls To Fresh 1-Mo Low On Debt Woes
fxbom.com
02:09 PM
TOKYO -(Dow Jones)- The euro fell to fresh one-month lows against the dollar and yen on Wednesday in Asia as worsening European bond market conditions weighed on investor sentiment toward the region’s debt problems and the single currency.
The euro fell to its lowest level since Oct. 10 at $1.3437 and Y103.59 earlier in the day. Tokyo traders said some short-term-focused investors executed automated stop-loss selling orders around $1.3500, triggering the broad euro sell-off.
Traders pointed out the worsening outlook for the European debt problem, which has been pushing up European sovereign bond yields recently.
Triple-A rated French and Austrian bond yields are gaining, and traders pointed to that as strong evidence of how serious the debt problem is.
“Judging from recent European bond market conditions, the euro has a high-risk of a near-term plunge,” said Hiroshi Maeba, a senior dealer at Nomura Securities.
With such pessimism spreading, some Tokyo options traders bought two-week euro-put contracts with Y101.50 strike, a bet that the European unit may fall below the strike price within the next couple of weeks.
“Thanks to the approaching Thanksgiving holiday season, prices of option contracts usually get cheaper around this time of the year,” said a senior options trader. “But this year so far, we’ve seen prices picking up.”
The focus later in the day is how European bond markets are going to fare and whether European authorities can come up with any countermeasures, said Osao Iizuka, head of FX trading at Sumitomo Trust & Banking.
“If the euro spikes, that’s when to sell it,” he said.
Meanwhile, the Bank of Japan decided to refrain from taking additional easing steps despite the ongoing European sovereign debt crisis and the yen’s strength, as the bank tries to gauge the impact of its latest credit easing. The bank’s policy board voted unanimously to leave its policy rate–the unsecured overnight call loan rate–in a 0.0%-0.1% range.
The euro was at $1.3453 as of 0450 GMT from $1.3587 late Tuesday in New York and was at Y103.65 from Y104.25, according to EBS. The dollar was at Y77.04 from Y77.03. The U.K. pound was at $1.5766, after falling to a three-week low of $1.5758, from $1.5945. The dollar was at CHF0.9201, after rising to a one-month high of CHF0.9209, from CHF0.9149.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 78.291, after rising to a one-month high of 78.363, from 77.904.
Elsewhere in Asia, the Australian dollar declined to its lowest level in a week versus the U.S. dollar. Traders said the fall was due to knock-on effects from the falling euro.
“Part of it is simply correlation trade. They’re all just so linked by computer models that when one of those three (euro, Australian dollar and stocks) goes, the other two go with it,” said a Brisbane-based trader.
The unit was at $1.0079 and Y77.65 as of 0450 GMT, after briefly falling to as low as $1.0072 and Y77.60.
Interbank Foreign Exchange Rates At 2350 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 77.04-06 77.02-04 +0.03 77.14 77.04 -5.02
EUR/USD Euro 1.3453-56 1.3538-44 -0.64 1.3538 1.3439 +0.47
GBP/USD U.K. 1.5765-70 1.5820-25 -0.35 1.5827 1.5760 +1.02
USD/CHF Switzerland 0.9199-202 0.9137-52 +0.61 0.9208 0.9154 -1.60
USD/CAD Canada 1.0263-68 1.0207-13 +0.54 1.0274 1.0202 +3.20
AUD/USD Australia 1.0078-82 1.0175-80 -0.95 1.0180 1.0074 -1.50
NZD/USD New Zealand 0.7653-58 0.7710-16 -0.75 0.7715 0.7656 -1.81
Euro Rate
EUR/JPY Japan 103.64-68 104.26-37 -0.63 104.29 103.60 -4.58
Source: ICAP Plc.
-By Takashi Mochizuki, Dow Jones Newswires; 813-6269-2782; takashi.mochizuki@dowjones.com
Related posts:
- Euro Reaches Week High on German-French Accord on Greek Debt; Aussie Falls
- Stronger Euro Moves by Asian Interests Buy Bonds Euro Zone
- Euro Down Continues, by the European Debt Worries
- Euro Still Stronger, European Debt Crisis Issue While It’s cool
- Euro-U.S. Dollar weakened Move to Position Lowest Since 15 September
