The dollar fell below the psychologically-important JPY95.00 mark for the first time in two months versus the yen in Asia Monday, as drops in regional shares and signs of swine flu spreading in Japan fueled demand for what dealers see as safe currencies. The U.S. currency fell to JPY94.55, its weakest level since JPY94.15 on March 20.
Investors often buy Japan's currency at times of crisis. Even despite the prospects that any further increases in swine flu in Japan cases could hinder the nation's economic activity, buyers snapped up the yen on speculation that such an outlook should rather aid the yen by lifting global demand for safe-haven currencies, traders said.
The yen also got a boost as Japan's benchmark Nikkei 225 Stock Average slid as much as 2.9% by early afternoon in Asian hours, while other Asian indexes like those in South Korea and Hong Kong fell. On Friday euro fell against the dollar and versus the yen after a German government report showed Europe's largest economy contracted last quarter by more than economists estimated.
The Euro fell heavily from highs at the start of the US session above USD1.3600. Support at USD1.3500 broke and the pair looks on its way to the 200 day moving average at USD1.3420. The Pound fell to the resurgent USD but managed to hold up relatively well against other currencies. EURGBP and GBPAUD managed to make small but solid gains. Ongoing weakness against the USD is not the preferred option but flows in the Euro will dominant direction.
Renewed risk aversion knocked the Australian dollar during Asia trading Monday, setting the theme of likely further losses for commodity currencies this week and potential gains for interest rate futures. Market expectation The euro is lower as risk aversion favors the dollar and the yen on Monday. Traders will watch to see whether the dollar will continue to benefit from a return of risk aversion, while the Swiss franc shares the spotlight in gaining against the euro of late. EURUSD recovered with euro-yen ahead of the European open, traders noting Asian sovereign demand appearing around USD1.3430, with rate pressing up to USD1.3470/75, currently trading around USD1.3455.
Offers seen placed to USD1.3475, a break above to allow for a move on toward USD1.3490/00 (USD1.3493 late New York recovery high). Above here and rate can push on toward USD1.3525. Support USD1.3430/20, more toward USD1.3400. USDJPY nudges up to 94.97 with EURJPY back near JPY127.84, as speculators cover shorts before Moody's briefing , says traders ; is some chatter in market on what briefing might say, as Moody's will discuss its new way of rating Japan government bonds. Trader puts USDJPY resistance at JPY95.50 for now. Markets will be keenly watching for any signals from either policy maker on the prognosis for Australia's economy, although traders searching for renewed direction might be disappointed, analysts said.