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Euro, dollar trade narrowly in Asian forex markets

August 7, 2012

TOKYO: The euro was mixed in afternoon Asian trade toady as dealers kept their eyes on the European Central Bank for policy moves aimed at tackling the debt crisis, while the dollar held its ground.

The eurozone common currency bought US$1.2385 and 96.94 yen, from US$1.2383 and 96.97 yen in New York trade late yesterday.

The dollar rose slightly against the Japanese currency, buying 78.26 yen from 78.20 yen in US trade, after the US Department of Labor said last week that the world’s biggest economy created more jobs in July than expected.

The euro may lack further upward momentum in the absence of fresh cues, amid continuing guesswork on the path of the eurozone crisis and any near-term policy moves by the European Central Bank, said Osao Iizuka, head of FX trading at Sumitomo Mitsui Trust Bank.

Meanwhile, Australia’s central bank held interest rates unchanged at 3.50% today, saying previous cuts were still trickling through the economy despite a softer global outlook.

Currency markets largely shrugged off an intensifying political drama in Japan, with opposition threats to hold up a controversial tax bill having little impact on the yen, dealers said.

The opposition Liberal Democratic Party has threatened a no-confidence motion against Prime Minister Yoshihiko Noda – which may stall a plan to double Japan’s sales tax by 2015 aimed at chopping a massive public debt – unless the premier promises to hold snap elections.

“If the tax bill fails to pass and is scrapped, that would have a huge impact on the markets by inviting a spike in (Japanese government bonds) yields and a weaker yen,” said Tomoko Fujii, senior FX strategist at Bank of America-Merrill Lynch in Tokyo.

“But the market doesn’t see that happening. People are optimistic that lawmakers can compromise in some way.”

The dollar was mixed against other Asia-Pacific currencies.

It firmed to 55.44 Indian rupees from 55.26 rupees on Friday, to 1,129.10 South Korean won from 1,126.70 won, to 41.80 Philippine pesos from 41.79 pesos, and to Tw$29.94 from Tw$29.93.

The greenback weakened 9,460.00 Indonesian rupiah from 9,465.00 rupiah, and to 31.47 Thai baht from 31.48 baht, while it was unchanged at S$1.2414.

The Australian dollar rose to $1.0580 from $1.0563 while the Chinese yuan bought 12.27 yen against 12.29 yen.



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