The Japanese Yen and the U.S. Dollar both made gains in trading today, as investor optimism propelled a recent stock market rally, and high risk currencies yielded to bank caution. A drop in U.S. and European shares yesterday, which was fuelled by continued concern over the economic health of the global banking system and IBM’s failed bid for Sun Microsystems, spurred profit-taking in several currencies, including the single currency Euro, and the New Zealand and Australian Dollars.
The Aussie and NZ Dollars, which have both profited in recent days from improved investor risk appetite, saw a retreat from recent highs, as investors wait for word from Reserve Bank of Australia on additional interest rate cuts.
The rate is currently set at a historic low of 3.25%. According to some traders, the drop in the Euro, as well as high yielding currencies, occurred as a result of profit-taking on the heels of the recent 6-month highs touched on Monday. As reported at 2:04 pm (JST) in Japan, the Euro lost .4% versus the U.S. Dollar, trading at $1.3358; versus the Japanese Yen, the Euro lost .8%, trading at 134.38 Yen.