Euro hits decade low vs yen, more falls likely

[bhinder]

LONDON: The euro fell to a decade low versus the Japanese yen on Monday with more falls expected as concerns about the financing needs of highly indebted euro zone countries plagued the shared currency into the new calendar year. The euro fell as low as 98.71 yen on the EBS trading platform in early Asian trade, its lowest since late 2000, extending falls on Friday when it broke below 100 yen to finish the year down around 8 percent.
It recovered to trade flat for the day at 99.60 yen in Europe, with liquidity thin because most Asian markets as well as the UK and U.S. were closed for New Year holidays. Versus the dollar, the euro was steady at $1.2947, less than a cent above its 2011 low of $1.2858 hit last week. Worries about high sovereign debt levels and a lack of policy solutions to the region's 2-year-old debt crisis were expected to push the euro lower in the coming weeks and months. However, the slide may be limited by periodic short-covering rallies as investors trim hefty bets against the currency, with Commodity Futures Trading Commission data on Friday showing short euro positions swelled to a record high in the latest week. "There's still a lot of pressure on the euro due to concerns about the refinancing needs of some euro zone countries in the first quarter," said Arne Lohmann Rasmussen, head of currency research at Danske Bank in Copenhagen. "This is driving many to safer assets and currencies, like the Japanese yen." However, he said the substantial number of short euro positions could limit the euro's falls, potentially enabling it to rebound back above $1.30 versus the dollar, especially if U.S. ISM and jobs data this week point to an improving U.S. economy. Nevertheless, in the absence of a comprehensive European policy response to the debt crisis, the euro could test its 2010 low of $1.1876 this year, some traders said, while support was highlighted around $1.2600, the 76.4 percent retracement of the euro's 2010-2011 rally. Policymakers marked the 10th anniversary on Sunday of the introduction of euro notes and coins by urging governments to save and consolidate to overcome their debt crises, while warning 2012 would be harder than 2011. Concerns about the massive task facing European leaders as they struggle to contain the region's debt crisis were highlighted as Spain's new government warned last week its 2011 budget deficit would be larger than expected. A deteriorating euro zone economy will also worry investors, with many anticipating a recession in the region. A survey on Monday showed euro zone manufacturing activity declined for a fifth consecutive month in December. "We believe that the generally dire euro zone purchasing manufacturers surveys provide significant support to the case for the ECB to cut interest rates again in the early months of 2012, especially as they show essentially muted inflationary pressures," said Howard Archer, chief UK and Europe economist at IHS Global Insight. DEBT AUCTIONS EYED Italy, the euro zone's third-largest economy, remains at the centre of the debt crisis, and its borrowing needs could overwhelm the bloc's financial defences if it were forced to seek an international bailout.

 

[bhinder]

Yuan inches up; stability seen as China visit to US approaches

China's yuan traded slightly stronger on Tuesday but will likely hold steady between 6.30 and 6.35 against the dollar in the weeks leading up to Vice Premier Xi Jinping's visit to the United States, traders and analysts say. Spot yuan traded at 6.3136 at midday, 29 pips stronger than Monday's close, after the central bank set a slightly stronger mid-point in response to a small decline in the dollar overnight. Traders expect the central bank to hold the yuan steady for the next several weeks, if not longer, as policymakers assess the magnitude and impact of a narrowing trade surplus and declining foreign exchange inflows. Following a decline in China's foreign exchange reserves in the fourth quarter of 2011 and three consecutive monthly declines in net foreign exchange purchases by the central bank and commercial banks, analysts believe the central bank has little appetite for further yuan appreciation in the short term. "Three straight months of falling foreign exchange purchases have definitely weakened appreciation expectations for this year," said a trader at a foreign bank in Shanghai. On the other hand, with Xi's visit to the United States to occur sometime in the next month -- though the date is not yet certain -- China is also unlikely to push down the yuan. The U.S. typically voices its concerns about what it believes is an undervalued yuan at high-level meetings between the two countries. Despite signs of foreign exchange outflows in recent data, market pressure still appears to be pushing the yuan to appreciate. Following several weeks in November and December during which the yuan closed weaker than the central bank's mid-point fixing, China's currency has closed stronger than the mid-point every day so far in 2012. In the offshore non-deliverable market, one-year NDFs traded at 6.3150, implying 0.02 percent depreciation over the next year, compared to 0.008 percent appreciation implied at Monday's close. In the offshore yuan market, spot CNH traded at a 0.12 percent premium to the onshore spot rate, compared to a 0.09 percent premium at Monday's close. The yuan has now appreciated 8.1 percent since it was depegged in June 2010.

 

[humie]

eur/usd is today little bit in up position but now chf/usd is better

 

[johnathan]

Euro firms on risk appetite 18 jan

TOKYO: The euro edged up against the dollar and yen in Asia on Wednesday as funds flowed to riskier currencies amid speculation of easing monetary policy in China, traders said. The euro fetched $1.2781 and 97.98 yen in Tokyo afternoon trade, up from $1.2737 and 97.84 yen in New York late Tuesday. The dollar eased to 76.67 yen from 76.82 yen in New York. The euro was up on a local report that China's central bank had lowered reserve requirements for some banks, spurring buying in riskier currencies, traders told Dow Jones Newswires. China said Tuesday its economy expanded 9.2 percent last year, a healthy figure but slower than a 10.4 percent expansion in 2010 as global turbulence and efforts to tame high inflation put the brakes on growth. The euro will likely remain under pressure as Greece resumes talks on debt restructuring and Portugal tests investor confidence with a bond sale later Wednesday, said Masafumi Yamamoto, chief FX strategist at Barclays Capital in Tokyo. A possible Greek default presented a "negative risk" for the common currency, he noted. "I am not optimistic on the situation," Yamamoto said. Credit Suisse said the euro's bottom against the yen had yet to be seen.
"Policy options (for Japan) would be euro-buying intervention and additional credit easing by the Bank of Japan, and the possibility of the former is increasing," it said in a note. Athens and its bankers are to explore on Wednesday and Thursday ways of cutting 100 billion euros ($128 billion) from a total of more than 350 billion euros in debt that is crushing the country's finances. The dollar was weaker against other Asian currencies. The greenback edged down to 31.77 Thai baht from 31.81 on Tuesday, to Sg$1.2817 from Sg$1.2834, to 43.52 Philippine pesos from 43.66 and to 1,141.40 South Korean won from 1,145.40. it also eased to 9,180.00 Indonesian rupiah from 9,197.25 and to Tw$29.95 from Tw$29.97.

 

[Fxpipper]

USD is still weak against Asian currencies and does not seem to buck the trend for the short term.

 

[johnathan]

Yuan slips vs dollar, short-term appreciation intact 3 feb

SHANGHAI: The yuan fell slightly against the dollar on Friday guided lower by the People's Bank of China's mid-point, but is still set for a weekly gain as the market expects the Chinese currency to stage a new leg of modest appreciation over the next two weeks.
Chinese Vice President and leader-in-waiting Xi Jinping will visit the United States in mid-February, and traders believe China may offer a goodwill gesture to let the currency rise ahead and during the visit, possibly letting it also breach its historical trading high of 6.2919 set in early January.
But the PBOC appeared not in a hurry to allow the currency to reach record high levels yet by fixing a weak mid-point on Friday, traders said.
The yuan thus slipped but remained near the crucial level of 6.3 against the dollar in morning trading, they said.
"The PBOC controls the pace of yuan appreciation as usual," said a trader at a European bank in Shanghai.
"But Friday's slight weakening won't derail a new leg of yuan appreciation ahead of Xi's US trip."
Spot yuan was trading at 6.3055 versus the dollar at midday, marginally weaker than Thursday's close of 6.3018 after the PBOC fixed a slightly softer mid-point of 6.3102 against Thursday's 6.3075.
As of midday, the yuan is set to rise 0.53 per cent this week in what traders believe is a prelude to the yuan's new round of gains in the next two weeks. The market was closed all last week for the Lunar New Year holiday.
Traders, however, said that the new leg of yuan appreciation will not herald a steep rise in the currency this year as China evaluates the impact on its exports from a weak global economy.
Traders instead expect the yuan to firm by about 3 per cent this year, a slower pace against a 4.7 per cent rise in 2011 when the currency steadily appreciated until late in the third quarter when the euro zone debt crisis began worsening.
US President Barack Obama will host China's Vice President Xi at the White House on Feb. 14.
China has long faced pressure from the United States to let its currency appreciate to help balance bilateral trade but it has repeatedly said it needs to decide the yuan's exchange rate in line with its own economic conditions.
In reality, the government has allowed the yuan to rise intermittently and especially during state visits of the countries' leaders, viewed by the market as goodwill and diplomatic gestures due to the importance of ties between the world's two biggest economies.
In the offshore non-deliverable forward market, one-year NDFs traded at 6.2730 around midday, implying 0.59 per cent yuan appreciation over the next year, compared with a 0.63 per cent rise implied at Thursday's close.

 

[bhinder]

Euro near 2-month high on hopes for Greece debt deal

The euro eased on Wednesday but still held near a two-month high, supported by hopes that Greece may soon agree to austerity steps needed to secure a second bailout and avoid a disorderly default.
The dollar rose versus the yen, helped by dollar demand from Japanese importers. Cross/yen pairs were also mostly firmer, their near-term technical outlook having improved after they breached some resistance levels recently.
The euro dipped 0.1 percent to $1.3252, not far from a two-month high near $1.3270 hit the previous day on trading platform EBS.
The previous day's surge in the euro was due to a squeeze in short-positions, rather than on a view that all is well in Europe, market players said.
While there are suggestions Greece is close to an agreement, Athens politicians have yet to agree to painful austerity measures to receive a second bailout package. They have delayed, once more, the deal deadline to Wednesday.
Even if an agreement is reached, the euro may have limited scope to rally, said Mitul Kotecha, head of global foreign exchange strategy for Credit Ag icole in Hong Kong.
"Potentially we may even have a buy on rumour, sell on fact type of outcome," Kotecha said.
"Euro has already strengthened fairly sharply on expectations of some sort of a deal and I think once it does happen we may see a little bit more upside at most," he added.
The next level of resistance for the euro is found at the 100-day moving average of around $1.3334, ahead of $1.3436, the 50 percent retracement of the decline from the late-October high of $1.4248 to the mid-January low of $1.2624.
A trader for a major Japanese bank in Singapore said the euro could see more short-covering if Greece agrees to a deal.
"The sense I get is that some short-term players have been putting on short euro positions," the trader said, adding that there was talk of stop-loss euro bids at levels above $1.3300.
Given such market positioning and because many players still have bearish views on the euro, the possibility of further position unwinding lifting the single currency to around $1.3500 or $1.3550 could not be ruled out, he added.
CROSS/YEN The dollar rose 0.3 percent to 76.97 yen, inching away from a three-month low of 76.027 yen hit last week.
The yen eased broadly, with the euro rising 0.2 percent to 102.01 yen and sterling edging up 0.3 percent to 122.34 yen.
Some market players have become bullish on dollar/yen and cross/yen after Japan confirmed this week that it had followed up its massive yen-selling intervention last October with covert intervention in early November, said the trader for a Japanese bank in Singapore.
Another trader said there was an increased focus on cross/yen pairs after they breached some resistance levels recently.
With its gain the previous day, the euro rose above resistance at the bottom of the daily Ichimoku cloud. The next major resistance on the daily Ichimoku chart, a popular technical analysis tool, comes in at around 105.14 yen.
In a similar signal, sterling/yen initially poked above the bottom of the cloud late last week and now faces resistance at the top of the cloud at 123.09 yen.
A senior spot trader for a major Japanese bank in Tokyo said Japanese exporters are waiting on the sidelines eager to sell into euro/yen and Aussie/yen strength, adding that his sense is that the recent improvement in risk sentiment will lift the cross/yen pairs a little further.