Despite very thin trading during this holiday week, the Euro saw some gains in early morning trading today versus the U.S. Dollar. Meanwhile, the Japanese Yen lost ground against the Euro, as investors risk aversion eased somewhat. Last week, the Euro saw significant losses against the U.S. Dollar; as a daily percentage, trading was at its lowest point in almost 2 months. All indications show that investors and analysts alike believe that the Federal Reserve rate cut was too severe.
The Bank of Japan’s key interest rate cut last week caused the Japanese Yen, already considered a low yielding currency, to struggle against most major currencies. The interest rate cute to near zero percent reduced the Yen’s yield to 0.1%.
At 08:54 GMT, the Euro gained 1% against the U.S. Dollar, trading at $1.4065. On the previous Friday, the Euro traded at a low of $1.3824, after hitting a high Thursday of $1.4720, the highest in almost three months.
Following the Japanese central bank’s rate cut, the Euro gained 1.6% to trade at 126.01 Yen. According to Masaaki Shirakawa, governor of the Bank of Japan, the continuation of deteriorating conditions in the Japanese economy prompted the rate cut.