WSJ:WORLD FOREX: Euro Falls Slightly Before Possible SNB Move
-- Euro falls due to weak share prices, but only slightly
-- Trading subdued ahead of possible moves by the Swiss authorities
-- Dollar may fall to Y76.25 in the near term, despite intervention worries
By Takashi Mochizuki
Of DOW JONES NEWSWIRES
TOKYO (Dow Jones)--Weak share prices prompted investors to sell the euro against the dollar and the yen Wednesday in Asia, but only slightly, as they took a wait-and-see stance before any possible moves by the Swiss authorities to weaken the franc.
While overall trade flows in Tokyo remained thin with many investors on summer leave, the small number of market participants took a cue from weak Japanese share prices to sell the common unit, traders said.
As of 0450 GMT, the Nikkei 225 Stock Average was down 0.5%, and the euro was at $1.4405 and was Y110.45 from $1.4407 and Y110.68 in New York Tuesday.
The declines were small and within the margin of position adjustments, traders said, adding they are monitoring to see if the Swiss authorities indeed take steps to counter the rising franc.
The Swiss government and Swiss National Bank are expected to make announcements at any time.
"It's hard to speculate what steps the Swiss authorities will decide to introduce. The euro is difficult to trade at least before their announcements," said Satoshi Tate, a senior dealer at Mizuho Corporate Bank.
J.P. Morgan strategist Junya Tanase said the house expects the SNB may pump liquidity into the market. Pegging the franc to the euro, which some traders are anticipating, has a low chance of becoming reality, he added.
The dollar, meanwhile, was at Y76.69 from Y76.82 and The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was unchanged at 73.975 from 73.836.
Mizuho's Tate said the greenback will fall against the yen at a gradual pace down the road, as investors still have concerns about the U.S. economy going forward.
Traders are cautious about the risk of Japan intervening in the currency market once the yen rises further, but they are slowly cutting down the dollar's trading range against the yen, Tate said. "In terms of technical signals, it's sell, obviously," he added.
The dollar was only able to rise to Y76.84 Tuesday, after failing to break above Y77.00 on EBS for the first time this year on Tuesday.
"Moves on Tuesday show there are many investors interested in selling the dollar against the yen, and it could be just a matter of time before the U.S. currency tries to touch its post-war record of Y76.25," Tate said.
Interbank Foreign Exchange Rates At 00:50 EDT / 0450 GMT
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