Dollar And Yen Slides Against Most Majors

Dollar And Yen Slides Against Most Majors


In early European deals on Wednesday, the U.S. dollar and the Japanese yen declined against their most major counterparts as investors reacted to European Central Bank council member Ewald Nowotny's comments that there are arguments in favor of giving Europe's rescue fund a banking license.
"I think there are pro arguments for this. There are also other arguments, but I would see this as an ongoing discussion," Bloomberg quoted Nowotny as saying.
Nowotny, who is in charge of the Austrian central bank, said he's not aware of "specific discussions" on the issue, the report said.
Disappointing German IFO business climate index and the first estimate of the U.K. second quarter GDP failed to limit weakness in dollar and yen, except against the pound.
Normally, the Japanese yen and US dollar are considered as safe haven currencies because these nations have lower lending rates. They tend to gain in times of risk aversion and vice-versa.
Germany's business confidence declined more than expected in July, the latest survey results from Ifo Institute showed. The business climate index fell to 103.3 in July from a revised 105.2 in June. Economists expected the index to fall to 104.5.
Meanwhile, the preliminary estimate from the Office for National Statistics showed that the U.K. economy contracted at a faster than expected pace in the second quarter.
The gross domestic product was down 0.7 percent sequentially, marking the biggest fall since the first quarter of 2009. The decline follows a 0.3 percent fall in the first quarter and 0.4 percent decrease in the fourth quarter of 2011. Economists expected a decline of 0.2 percent.
GDP dropped 0.8 percent from the same period of last year, bigger than the 0.3 percent fall expected by economists.
The dollar fell to 1.2135 against the euro and 0.9901 against the franc, compared to yesterday's close of 1.2064 and 0.9958, respectively. The next downside target level for the dollar is seen at 1.215 against the euro and 0.985 against the franc.
The US dollar dipped to 1.0178 against the Canadian dollar from an early Asian session's near 2-week high of 1.0234. If the greenback-loonie pair weakens further, it will break the 1.016 level. The pair ended yesterday's trading at 1.0225.
Against the Australian dollar, the U.S. dollar touched a low of 1.0276, compared to a 12-day high of 1.0180 hit in early Asian deals. On the downside, 1.030 is seen as the next target level for the greenback. At yesterday's close, the aussie-greenback pair was quoted at 1.0224.
Data from the Australian Bureau of Statistics showed early in the day that the CPI rose 0.5 percent in the second quarter of 2012 compared to the previous three months. That was slightly below forecasts for an increase of 0.6 percent following the 0.1 percent increase in the first quarter.
On a yearly basis, CPI was up 1.2 percent - also shy of expectations for an increase of 1.3 percent following the 1.6 percent gain three months earlier.
The U.S. dollar also eased from a 6-week high of 0.7810 against the New Zealand dollar. The kiwi-greenback pair that closed yesterday's trading at 0.7845 is now worth 0.7865. The next downside target level for the US currency is seen at 0.788.
In economic news from New Zealand, the country posted a seasonally adjusted merchandise trade surplus of NZ$331 million in June. That blew away forecasts for a surplus of NZ$2 million following the downwardly revised NZ$232 million surplus in May - which was originally reported at NZ$301 million.
But the U.S. dollar that fell to as low as 1.5554 against the British pound at 4:20 am ET rebounded thereafter as the latter was weakened by the U.K. GDP report. At present, the dollar is trading at a 12-day high of 1.5476 per pound, compared to Tuesday's close of 1.5508. If the dollar advances further, it will target the 1.545 level.
The yen also followed a similar trend against the pound, bouncing back from a low of 121.73 hit at 4:20 am ET. The pair is now trading near Tuesday's close of 121.28. On the upside, 121.0 is seen as the near term target level for the Japanese currency.
On the other hand, the yen declined against the rest of majors, hitting as low as 94.98 against the euro and 79.09 against the franc. The next downside target level for the yen is seen at 95.2 against the euro and 79.5 against the franc. The euro-yen and the franc-yen pairs were worth 94.35 and 78.57, respectively at yesterday's close.
Meanwhile, the yen hit 78.28 against the US dollar, falling from an early Asian session's 2-day high of 78.08. The near term support level for the Japanese currency is seen at 78.5. At yesterday's close, the dollar-yen pair was quoted at 78.20.
The yen also declined from its Asian session's multi-week highs against the commodity currencies. As of now, the yen is worth 76.90 against the Canadian dollar, 80.40 against the Australian dollar and 61.55 against the NZ dollar with 77.1, 80.6 and 62.0, seen respectively as the next downside target levels.
Traders now focus on the New York session, in which the U.S. new home sales data for June is due at 10 am ET.


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