WSJ:WORLD FOREX: Euro Holds Onto Gains, But Lack Momentum To Rise Further
-- Euro holds overseas gains made in relief rally Friday
-- Market acknowledges Italy developments, but continued euro rise doubtful
-- Yen gains on European, U.S. debt problems
By Tatsuo Ito
Of DOW JONES NEWSWIRES
TOKYO -(Dow Jones)- The euro held steady but lacked momentum to keep rising in Asia Monday after a relief rally overseas on Friday as Italy's approval of critical economic reforms and a new prime minister raised hopes for solution to its debt crisis.
"The market has paid respect to what Italy took to stabilize the market," said Takao Yahata, chief manager at Mitsubishi UFJ Trust and Banking. Newly named Italian Prime Minister Mario Monti said over the weekend he would name his Cabinet "with urgency," addressing the need to appease markets quickly.
"But these things don't necessarily mean that the euro will keep rising," Yahata said. He said various details to address the euro-zone debt crisis haven't been fleshed out, and there are growing concerns over the European economy's falling into recession triggered by the debt crisis.
At 0450 GMT, the euro was at $1.3772 from $1.3755 late Friday in North America, according to EBS via CQG.
Tokyo-Mitsubishi UFJ senior analyst Sumino Kamei also said "the euzo-zone sovereign debt situation remains unpredictable." Investors are focusing on the outcome of the Italian bond auction later in the day to see if bady injured market confidence is restored.
Meanwhile, Yahata said he was optimistic about the course of the U.S. debate to reduce its fiscal deficit ahead of the deadline for an agreement by the supercommittee later this month.
Still, "we must be careful about this issue as a delay of agreement could pose risks to the U.S. economy," he added.
As the euro and dollar each have problem, the yen tends to be bought as a safe-haven currency, Yahata added.
The market shrugged off a report that the Japanese economy grew an annualized 6.0% in the July-September period, posting its first gain since the economy was hobbled by the March 11 earthquake and tsunami.
The figure was mostly in line with economists' forecasts.
Fears of currency intervention by the Japanese finance ministry kept traders reluctant to sell dollars in Asia.
International Monetary Fund Managing Director Christine Lagarde said at in Tokyo Saturday that Japan's recent currency intervention aimed at curbing excess volatility "was in line with the spirit of G-7 and G-20." Traders took her comments as a sign the IMF intended a certain understanding of the Japanese effort to combat the yen's rise.
The dollar was at Y77.13 from Y77.14 in North American trade Friday, while the euro was at Y106.21 from Y106.49. The dollar was at CHF0.8999 from CHF0.8955. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 76.871 from 76.910.
Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT
