Euro Holds Gains
The euro held gains on Tuesday as risk sentiment was bolstered by the perception that Greece will be able to raise money via financial markets. Greece’s debt management agency reported that it sold 5 billion Euros ($6.72 billion USD) of seven year bonds at 5.9% twice what Germany pays for similar bonds. Despite the euro’s recent gains analysts see very limited euro potential because of euro zone debt concerns and slow euro zone growth and also think euro gains will be short lived. John Horner of Deutsche Bank stated, “This appears to be a short term reprieve for the euro. Apart from the festering debt-related problems, I think some strong U.S. data later this week could also give a lift to the U.S. dollar.” Investors remain optimistic about the US economy and Friday’s jobs report is expected to show that US employers added 190,000 jobs in March.
US Consumer Spending Up For Fifth Straight Month
A us government report issued Monday showed that US consumer spending rose for the fifth straight month. Most experts do not believe the Federal Reserve will raise rates until the second half of 2010 and most experts believe US rates will rise faster than those in Japan or Europe. The Japanese yen fell against most major currencies and hit an eight week low vs. the euro as signs of global recovery emerge paring demand for the safe haven of the yen. The yen hit its biggest monthly vs. the euro in advance of a Japanese report that is expected to show increasing manufacturer confidence. Sebastien Galy of BNP Paribas SA stated, “There’s a tremendous amount of pressure to push the yen lower in the next few days. The market is expecting Japanese institutional investors to be chasing steepness in yield curves globally in relatively safe places.” The yen fell 1.5% against the euro trading at 126.27 per euro and fell 0.8% vs. the US dollar to 93.47 per dollar. The euro gained 0.7% against the greenback to trade at $1.3510.
Japanese Fiscal Year Ends
The yen has posted a 4% monthly loss vs. the euro. The yen suffered accelerating losses as traders placed new bets on a weak yen. The Japanese fiscal year ended today. Investors also speculated that Japanese companies are finished repatriating funds. Lee Hardman of Bank of Tokyo-Mitsubishi UFJ Ltd said, “The fear was that heading into this fiscal year-end there would have be a significant potential for a pickup in repatriation of earnings back to Japan. If those flows have materialized, it’s had very little supportive impact on the yen.”
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