22 August 2001, 09:37 Asia FX Midday: USD/JPY mixed, EUR/USD down on Argentine deal
Tokyo, Aug.22 (BridgeNews) - U.S. Dollar/yen was mixed in a range
Wednesday morning. U.S. names kept selling the pair, but the downside move
was countered by dollar demand from Japanese investors and yen selling
against Australian dollar. Dollar was firmer against European currencies,
helped by a financial deal between Argentine and International Monetary
Fund for U.S. $8 billion emergency financing.
Dollar/yen buying from importers and yen selling on crosses have
supported the dollar against yen so far Wednesday. Dealers also point to
good bids in the mid-119s, discouraging a downside movement. Meanwhile,
the topside has been well capped by selling from U.S. names.
Good buying of Australian dollar/yen from Tokyo has been underpinning
dollar/yen and Australian dollar/U.S. dollar. In addition, dealers said
that euro/yen was bid below the 109.80 level.
Some dealers said the Australian dollar is being favored on interest
rate differentials, as the interest rate spread between the U.S. and Japan
has narrowed after the Federal Reserve Board cut the Federal Funds rate by
0.25% latest Fed cut Tuesday. Other dealers are skeptical about the
argument, however, saying that Australian dollar/yen buying could be only
temporary.
Japan's Finance Minister Masajuro Shiokawa said that current yen
levels are not good, adding that the MOF will continue to monitor foreign
exchange moves. Shiokawa also said that the MOF would respond if yen rises
are considered too excessive. The rhetoric of MOF Shiokawa has been
largely expected.
The dollar/yen rose to above the 120.00 on Shiokawa's comment, but
soon retreated back to the high 119's.
Some dealers said that the report that S&P may downgrade JGB ratings
underpinned the U.S. unit early in the morning. However, later in the
Asian morning, S&P denied such a speculation, saying that it has no plans
to downgrade Japan's AA+ rating in the short term and that reports to that
effect were misleading. The reaction to the report was not apparent,
however.
Meanwhile, euro/dollar eased ground slightly, after Argentine and
International Monetary Fund reached an agreement to financial aide package
to Argentine. Long liquidation pressures also weighed on the pair.
Argentina and the International Monetary Fund have agreed to U.S $8
billion in emergency financing, and the organization would support
restructuring of Buenos Aires' $128-billion public debt to avoid default,
the IMF said Tuesday.
Dealers said that the deal would clear one big financial uncertainty
in that county, which would be seen in turn positive for overall Latin
American financial market. They said that it would be bullish for the USD
as well, as stability in Latin America would benefit U.S. investors and
corporations which has strong presence in the region.
Meanwhile, the top side of the euro/dollar was constrained by good
euro/yen selling pressures above the 110.00 area.
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