🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

FOREX-Yen, dollar rise as jitters revive, RBA in focus

Published 04/06/2009, 09:50 PM
Updated 04/06/2009, 10:16 PM
BARC
-
IBM
-

* Dollar, yen gain as market optimism gives way to caution

* RBA holds rate meeting, close call on whether it will cut

* BOJ meets, seen assessing conditions but no major action TOKYO, April 7 (Reuters) - The yen and the dollar climbed on Tuesday, benefiting from defensive position-taking as a flush of optimism which powered a recent rally in stocks and higher-risk currencies gave way to caution about banks.

The yen had slid to its lowest in nearly six months against the dollar and euro on Monday but later revived as U.S. and European shares fell on renewed worries about the health of banks and the collapse of IBM's takeover bid for Sun Microsystems.

The Australian and New Zealand dollars, which have both ridden higher on improving risk appetite, also retreated from recent multi-month highs, with the market keen to see whether Australia's central bank cuts rates.

Analysts said there was both profit-taking after recent sharp gains and a renewal of risk-averse positions, with the dollar and the yen benefiting on safety bids when investor confidence wanes.

"It's a tendency since the financial crisis for investors to be risk averse, and they don't hold positions for a long time. As a result the theme in the market changes every week," said Toru Umemoto, chief FX strategist at Barclays Capital in Tokyo.

The euro fell 0.4 percent on the day to $1.3358 and 0.6 percent to 134.65 yen, after touching 137.42 yen on Monday, its highest since late October.

The dollar also slipped against the yen, falling 0.2 percent to 100.79 yen after climbing to 101.45 yen on Monday. Against a basket of major currencies it was up 0.2 percent.

The Reserve Bank of Australia (RBA) meets to decide whether to cut interest rates by 25 to 50 basis points or keep them steady at a record low of 3.25 percent, with the decision due at 0430 GMT.

The decision is seen as a very close call. The Australian dollar slid 0.5 percent to $0.7080 and 0.7 percent to 71.43 yen, after leaping to a six-month high of 72.87 yen on Monday, according to Reuters data.

The Bank of Japan ends a two-day meeting on Tuesday and is expected to keep interest rates unchanged at 0.1 percent.

But it may start lending against a wider range of municipal bonds to support regional banks, which are reeling in a domestic credit crunch and Japan's worst recession since World War Two.. (Reporting by Charlotte Cooper; Editing by Hugh Lawson)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.