Yen holds ground versus USD, sterling weak

SYDNEY Wed Feb 20, 2013 4:32am IST

1 of 2. A man holds Japanese 10,000 Yen ($121) bank notes in front of a bank in Tokyo November 22, 2012.

Credit: Reuters/Kim Kyung-Hoon

Related Topics

SYDNEY (Reuters) - The yen held its ground against the dollar on Wednesday as doubts surfaced on whether the Bank of Japan will put into action bold plans to jumpstart the economy, while sterling languished at a seven-month low.

A delay in nominating a Bank of Japan governor has fanned talk of friction between Japan's prime minister and finance minister over who should run a central bank charged with taking aggressive action to beat deflation.

Japan's trade data due at 2350 GMT is shaping up to be the next focal point with a weak outcome likely to bolster efforts to reflate the economy.

The dollar, which has gained around 8 percent on the yen this year, stood at 93.55 having retreated from Monday's high of 94.22. But it still remained near a 33-month peak near 94.47 set on February 11.

The euro bought 125.20 yen after recovering from a dip to 124.56, in part thanks to a closely watched ZEW survey showing a jump in German investor and analyst sentiment to three-year highs.

That upbeat data also helped lift the euro against its U.S. counterpart, pushing the common currency to a near one-week high of $1.3396. It was last at $1.3385.

The ZEW report is a positive sign ahead of the more important euro zone flash PMIs on Thursday and Germany's IFO business sentiment on Friday, said Vassili Serebriakov, a strategist at BNP Paribas.

"We therefore continue to view any pullbacks in EUR/USD as corrective, with support coming from the November bullish daily trendline currently at 1.3280. We expect EUR/USD to rally to 1.3800 by the end of Q1," he said.

Against sterling, the euro touched a two-week high at 86.85 pence. Investors gave the pound a wide berth partly on growing speculation the UK could soon lose its prized triple-A credit rating.

The market was also waiting for minutes of the Bank of England's latest policy meeting, looking for signs on whether policymakers will continue to tolerate above-target inflation and a weaker pound.

Sterling traded at $1.5424, having plumbed a seven-month low at $1.5414 in New York.

Commodity currencies like the Australian and New Zealand currencies fared much better, with the Aussie dollar popping back above $1.0300. Still, it remained contained a slim $1.0200/0400 range seen for most of this month.

Christopher Vecchio, currency analyst at DailyFX said a fall below $1.0260/70 would be needed to confirm a breakdown. "With the downtrend swing highs coming in at $1.0460/80, our bias remains bearish against this zone. A break above implies a rebound back towards the highs above 1.0600."

Partly supporting the Aussie, minutes of the Reserve Bank of Australia February 5 policy meeting out on Tuesday suggested the central bank was in a wait-and-see-mode, rather than seeking to actively cut interest rates.

(Editing by Wayne Cole)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Public Health

REUTERS SHOWCASE

Cost Cutting

Cost Cutting

PM Narendra Modi boots officials out of the first class cabin  Full Article 

Airtel Profit Jumps

Airtel Profit Jumps

Bharti Q2 net profit more than doubles   Full Article 

Leisure Riding

Leisure Riding

Harley-Davidson woos affluent young Indians with bike culture  Full Article 

Maruti Earnings

Maruti Earnings

Maruti Suzuki net profit up 29 percent, beats estimates.  Full Article 

ICICI Results

ICICI Results

ICICI Bank Q2 profit up 15 percent, beats estimates.  Full Article 

Moody's on India

Moody's on India

Moody's welcomes India's policy steps, but wants to see more.  Full Article 

End Of QE

End Of QE

U.S. Fed ends bond buying, exhibits confidence in U.S. recovery.  Full Article 

Cook Comes Out

Cook Comes Out

Apple's Cook: "I'm proud to be gay"  Full Article 

Refining Margins

Refining Margins

BPCL aims to double refining margins with refinery expansion.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage