Wednesday, March 28, 2012

US dollar inches up against euro; yen slips further

NEW YORK: The US dollar rebounded slightly against the euro on Tuesday in a day that offered little concrete news for traders to act on.

A downturn in US consumer confidence was expected and did not hinder dollar buyers, while the euro's sag was underpinned by a Bank of Spain report showing that Spain's economy has skidded back into recession.

At 2100 GMT the euro bought $1.3315, compared to $1.3356 at the same time on Monday.

The Japanese currency continued to slip, with the dollar rising to 83.15 yen from 82.84 yen, and the euro moving to 110.71 yen from 110.66.

"As the Bank of Japan pledges to meet the one percent target for inflation, the central bank is widely expected to ramp up its asset-purchase program throughout 2012," said David Song of DailyFx.

"The dovish tone held by the BoJ should continue to prop up the dollar-yen (rate)," he said.

Analysts continued to parse the dovish comments of Federal Reserve chief Ben Bernanke in recent days but widely disagreed on whether his concerns that growth remained weak were a prelude to a new stimulus program in the coming months which could boost the dollar.

Bernanke's arguments "support the case for further policy action. We continue to expect the (Fed) to implement another round of QE (quantitative easing) over the summer," said Nomura Global Economics.

But Ian Shepherdson of High Frequency Economics said Bernanke's concerns are not echoed by other Fed policy makers, and that no new stimulus is likely.

"We remain of the view that Mr. Bernanke could push through more QE now only after a titanic struggle, and that the recent stronger data mean it is effectively off the agenda for now."

The dollar gained to 0.9050 Swiss francs from 0.9028, while the British pound slipped to $1.5949 from $1.5970.

- AFP/de

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Source From Channet News Asia

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