EUR/JPY
Euro Soars To Multi-week Highs Against Yen And Franc [EUR/JPY]
4/7/2008 7:16:14 AM Monday morning, the European currency advanced to multi-week highs against the yen and the franc as rally in stock prices prompted investors to buy higher-yielding currencies funded with loans from Japan and Switzerland where the interest rates are low.
The euro also strengthened to a 4-day high against the pound, but the single currency dipped to a 4-day low against the dollar.
The euro-dollar pair reached a 4-day low of 1.5629 at about 3:20 am ET, compared to 1.5735 hit late Friday in New York. Currently, the pair is trading at 1.5703.
The dollar is trading higher today, regaining some ground after Friday`s fall following the release of disappointing jobs data.
On Friday, the U.S. Labor Department reported 80,000 jobs were lost in March, the biggest loss in five years and far worse than an expected 50,000 fall in jobs.
Federal Reserve Chairman Ben Bernanke on Wednesday conceded that the US economy might slip into a recession. Bernanke said that the interest rate cuts as well as the emergency measures “appear to have helped stabilize the situation” in financial markets “somewhat.” but he said that these markets are still under “considerable stress.”
The chairman defended the Fed`s role in providing emergency funding to prevent an abrupt bankruptcy at Bear Stearns which “could have been severe and extremely difficult to contain” with fallout for the real economy as well as the financial system.
The Federal Reserve will release the minutes of its March 18 meeting tomorrow. At its March meeting, the Fed decided to lower its key interest rates by 75 basis points, less than the 1 to 1.25-percentage point reduction that was expected by the market.
The euro strengthened to a 38-day high of 1.5933 against the franc at about 5:55 am ET Monday despite a release of better unemployment data from the Swiss economy. The euro-franc pair was worth 1.5830 at Friday`s North American close. Immediate resistance for the euro is seen around 1.622 level.
The State Secretariat for Economic Affairs, or SECO, reported today that Switzerland`s jobless rate dropped to 2.6% in March from 2.7% registered in February. The unemployment rate came in line with analysts` expectations. The number of unemployed people decreased 12% or 14,138 year-on-year to 103,777 in March.
Apart from the euro, the franc dipped to new multi-day lows against the dollar and the pound.
Against the yen, the European single currency advanced to a 40-day high during today`s deals. At about 6:05 am ET, the euro-yen pair reached 161.35, compared to Friday`s closing value of 159.78. If the euro strengthens further, it may test resistance around the 162.9 level.
The euro started strengthening against the yen after hitting a new multi-month low of 151.74 on March 20. Since then, the euro has appreciated 3.86%.
The Bank of Japan will start its two-day meeting tomorrow to decide on interest rates, while the European Central Bank will have its monetary policy meeting on Thursday. The two central banks are widely expected to keep their rates steady but the market is keen to hear what they will say after their respective meetings.
The euro that closed Friday`s New York session deals at 0.7898 against the sterling climbed to a 4-day high of 0.7915 at about 6:05 am ET today. On the upside, 0.7962 is seen as the next target level for the pair.
The Bank of England is also expected to announce the monetary policy decision on Thursday. The BOE is widely expected to reduce the key interest rate by a quarter basis points to 5%.
The Euro zone annual inflation accelerated to a new record high in March, according to the latest flash estimate released by Eurostat last week. The inflation rate rose from 3.3 percent in February to 3.5 percent in March, way above the ECB target rate of 2.0 percent. The Annual M3 money supply growth slipped to 11.3 percent in February from 11.5 percent a year earlier.
Tags: EUR/JPY
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