The euro rose against the yen and dollar in Asia Wednesday as players bought back the common currency amid a continued bullish outlook for the European unit after it retreated from recent highs overnight.
Some players were also buying the euro, which tends to trade up on higher stocks, as Japan's benchmark Nikkei 225 Stock Average retraced earlier losses and briefly crossed into positive territory in the afternoon, dealers said.
At 0450 GMT, the euro stood at Y131.80 compared to Y131.60 late Tuesday in New York. Against the greenback, the common currency was at $1.3443.
"The key for the euro in the near-term is how stock prices will fare," said Osao Iizuka, head of foreign exchange trading at Sumitomo Trust & Banking.
If share prices picked up, this would lead to further gains for the euro, particularly against the yen, Iizuka said. "The euro has climbed about 10 yen over the past couple weeks," as investors' willingness to buy the higher yielding but riskier unit has rebounded with recovering share prices, he added.
But dealers said growing speculation that the European Central Bank may cut interest rates by as much as 50 basis points at its meeting next week would keep players from pushing it up much higher.
Against the dollar, the euro may hover around $1.3450, as "the ECB concerns limit its topside, but there are still no reasons to actively buy the dollar," said Sumitomo Trust & Banking's Iizuka.
For the rest of the week, the common currency may trade in a Y131-Y133 band against the yen, said Yuji Saito, vice president of foreign exchange at Societe Generale.
Meanwhile, the dollar was essentially unchanged against the yen, standing at Y97.80 at 0450 GMT compared with Y97.88 late Tuesday in New York.
While the greenback dipped slightly against the yen after Japanese trade data released in the morning showed Japan logged its first trade surplus in five months, the record drop in exports tempered any short-term players' enthusiasm for buying the yen, dealers said.
The yen could benefit from the trade data in the near term because they may assuage concerns that Japan could develop a chronic current account deficit, after logging its first such deficit in 13 years in January, said Masayuki Kichikawa, chief economist for Merrill Lynch. "Some people had been thinking that Japan might have a current account deficit this year, but the data should reduce those expectations," he said.
Some players were also buying the euro, which tends to trade up on higher stocks, as Japan's benchmark Nikkei 225 Stock Average retraced earlier losses and briefly crossed into positive territory in the afternoon, dealers said.
At 0450 GMT, the euro stood at Y131.80 compared to Y131.60 late Tuesday in New York. Against the greenback, the common currency was at $1.3443.
"The key for the euro in the near-term is how stock prices will fare," said Osao Iizuka, head of foreign exchange trading at Sumitomo Trust & Banking.
If share prices picked up, this would lead to further gains for the euro, particularly against the yen, Iizuka said. "The euro has climbed about 10 yen over the past couple weeks," as investors' willingness to buy the higher yielding but riskier unit has rebounded with recovering share prices, he added.
But dealers said growing speculation that the European Central Bank may cut interest rates by as much as 50 basis points at its meeting next week would keep players from pushing it up much higher.
Against the dollar, the euro may hover around $1.3450, as "the ECB concerns limit its topside, but there are still no reasons to actively buy the dollar," said Sumitomo Trust & Banking's Iizuka.
For the rest of the week, the common currency may trade in a Y131-Y133 band against the yen, said Yuji Saito, vice president of foreign exchange at Societe Generale.
Meanwhile, the dollar was essentially unchanged against the yen, standing at Y97.80 at 0450 GMT compared with Y97.88 late Tuesday in New York.
While the greenback dipped slightly against the yen after Japanese trade data released in the morning showed Japan logged its first trade surplus in five months, the record drop in exports tempered any short-term players' enthusiasm for buying the yen, dealers said.
The yen could benefit from the trade data in the near term because they may assuage concerns that Japan could develop a chronic current account deficit, after logging its first such deficit in 13 years in January, said Masayuki Kichikawa, chief economist for Merrill Lynch. "Some people had been thinking that Japan might have a current account deficit this year, but the data should reduce those expectations," he said.
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