MW: Dollar slips against all but yen in Asia trade
By William L. Watts, Lisa Twaronite and Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — The euro rose on Thursday, recovering from nearly the lowest since late September against the dollar, after the governor of Ireland’s central bank said Dublin was likely to accept a European Union-International Monetary Fund loan worth “tens of billions” of euros.
A sale of 10- and 30-year bonds by Spain and a general pickup in risk appetite were also credited with helping to lift the euro, strategists said. Uncertainty over the fate of an Irish aid package and ongoing concerns about debt problems elsewhere on the periphery of the euro zone may limit upside.
The euro (EURUSD 1.3630, +0.0102, +0.7542%) rose to $1.3627 from $1.3521 in late North American trading on Wednesday.
The dollar index (DXY 78.57, -0.51, -0.65%) , which measures the greenback against a basket of six major currencies, slipped to 78.623 from 79.099 late Wednesday.
Earlier this week, it touched 79.461, the highest since late September.
The British pound (GBPUSD 1.6010, +0.0107, +0.6728%) rose to $1.5997 from $1.5801 late Wednesday, boosted after the Office for National Statistics said U.K. retail sales rose 0.5% in October.
The dollar was little changed versus the Japanese yen (USDYEN 83.2400, +0.0500, +0.0601%) , trading at ¥83.29. See real-time currency quotes and tools.
Central Bank of Ireland Governor Patrick Honohan said Ireland is likely to end up receiving a loan as a result of talks between the government and officials from the European Commission, European Central Bank and the IMF, which were set to get under way Thursday. Ireland’s finance minister also acknowledged for the first time that the nation may welcome a rescue plan aimed solely at shoring up the banking sector. Read about Ireland’s, IMF.
Hopes for a deal have allowed the euro to bounce back from lows below $1.35 seen earlier this week, with the European single currency also benefiting from a generally weaker dollar, said Kathleen Brooks, research director at Forex.com.
If no formal announcement on Ireland is seen before the weekend, however, “it would herald another week of uncertainty, which in our view, would act as a heavy weight around the market’s neck.”
Also, many analysts have said that once the questions about Ireland are answered -- maybe regardless of what is decided -- traders will just turn their focus to other European nations with similar problems, namely Portugal and Spain.
“The announcement of an Irish deal so far presented as primarily related to Irish banks rather than to the Irish government’s fiscal position, has unwound some of the worst fears in markets,” said Steven Englander, a currency strategist at Citigroup. “Investors are not fully convinced about the package and what it means for the rest of Europe.”
Japanese yen
The U.S. dollar remained above yen levels at which market participants expected the Bank of Japan to intervene at the behest of the Ministry of Finance, to curb the yen’s appreciation. Such talk was rampant as the greenback teetered just about the ¥80 level in recent weeks.
“A large contingent of overseas speculators were keen to challenge the MOF’s resolve and test all-time lows in dollar-yen of ¥79.75,” said Bank of Tokyo-Mitsubishi UFJ strategist Naomi Fink.
“The problem, however, was that the anticipation of the Fed’s easing over-shot, exercising a much greater effect on the dollar than the announcement itself,” Fink said in emailed comments.
