By: Barbara Zigah
In Asian trading today, the common currency Euro and the U.S. Dollar both fell versus the safe-haven Japanese Yen on investor profit taking. As the Asian session opened, both currencies were expected to trade higher as investors hoped that the Tokyo share market might experience gains similar to those in the New York equity markets and, in fact, the Nikkei did gain 2.3% in the afternoon session. Later, however, Japanese exporters, followed quickly thereafter by short-term market players, sold off their holdings which pushed the Euro and greenback lower.
As reported at 2:50 p.m. (JST) in Tokyo, the Euro was trading against the Japanese Yen at 112.02 Yen, off from the intra-day peak of 112.67 Yen and yesterday’s level in New York of 112.05 Yen. The U.S. Dollar traded against the Yen at 86.65 Yen, off from the intra-day high of 87.23 Yen and yesterday’s New York trade of 86.93 Yen.
Markets will await the outcome of the Euro-zone bank stress tests to be released later today. Some players said that the Euro and U.S. Dollar might suffer further declines if the outcome is negative or if the perception is that the tests weren’t sufficiently stringent. One senior trader in Japan commented, however, that, in his opinion, the long-term prospect for the Euro appears dim, regardless of the results, as the credibility of the common currency still won’t be resolved.