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Dollar, euro firm in Asia

Jul 28 2010 11:18

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Tokyo - The dollar and the euro firmed in Asia on Wednesday as a stronger performance for equities in the region boosted risk appetite, analysts said.

The dollar rose to ¥87.90, slightly higher than ¥87.78 in New York on Tuesday afternoon.

The euro was at $1.3020, firming from $1.2997in New York. The single European currency fetched ¥114.24 compared with ¥114.20.

Stronger risk appetite has helped keep the euro and the dollar in a tight range following brighter earnings from European banks and upbeat sentiment about what were seen as positive regulatory developments.

Controversial stress tests to gauge the health of European banks last week gave most a clean bill of health despite misgivings about their stringency.

Better-than-expected profits from Switzerland's biggest bank UBS and Germany's Deutsche Bank combined with news that the Basel Committee on Banking Supervision had relaxed some of its proposals for capital requirements, boosting sentiment.

"Players holding ample cash are gradually becoming focused on risk-tolerance," a senior trader at a Japanese brokerage house told Dow Jones Newswires.

But news of sagging US consumer confidence capped gains, illustrating that challenges remain for the global economic recovery.

"The... mid-summer party was going so well. Then July US consumer confidence had to go and ruin the vibe," said RBC Capital Markets Senior Currency strategist David Watt in a research note.

Minoru Shioiri, senior dealer at Mitsubishi UFJ Morgan Stanley Securities, also said the euro's further advancement was unlikely in light of remaining worries about the European financial sector and economy.

"Players cannot find any reasons to continue accumulating euro-holdings," he said.

Elsewhere Australia's inflation rate rose much less than expected in the second quarter of 2010, meaning interest rates are likely to be kept on hold for a number of months at least.

The Australian dollar fell sharply after the data, trading at 0.8928 US dollars, down from 0.9003 just before the report.

The US dollar was trading mixed against other Asian currencies.

It rose to 32.22 Thai baht from 32.16 Tuesday, and to 1.3627 Singapore dollars from 1.3622.

It fell to 45.90 Philippine pesos from 45.97, to 1,183.05 South Korean won from 1 183.80, to 9 000.00 Indonesian rupiah from 9 045.00 and to 32.00 Taiwan dollars from 32.15.

  - Reuters

 
 
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