By: Barbara Zigah
Profit taking investors sold off their holdings in the common currency Euro, taking advantage of the previous session’s bounce when the Euro traded up off a multi-year low. As reported at 2:40 p.m. (JST) in Tokyo, the Euro slipped against the greenback, trading at $1.2348, a loss of .5%; earlier in the session it had risen to $1.2433 on the EBS trading platform. On Wednesday, short covering of the Euro helped push it higher against the U.S. Dollar, trading at $1.2143, a rebound from a 4-year low and a gain of 1.7% on the day, in fact, the best single day gain in a year.
Lowered risk tolerance in Asian helped to push high yielding currencies lower. The Australian Dollar struck an 8-month trough, trading against the U.S. Dollar at $0.8300, a loss of more than 2%; this week alone, the Aussie has lost nearly 6% against the greenback. Against the safe haven Japanese Yen, the Australian Dollar traded at 76.14 Yen, a loss of 2.4%. One analyst reported that the outlook for higher yielding currencies, such as the Australian and New Zealand Dollars as well as the Euro, was grim. During such periods of growing uncertainty, a tendency to risk aversion has investors looking to the safe haven currencies for their carry trade funding.