The euro edged higher against the dollar and yen in Asia...
Published: 18 June 2010 at 07.05 GMT

Previous session overview

The euro edged higher against the dollar and yen in Asia Friday as rising Tokyo shares and receding concerns over Spain's debt problems gave a boost to risk appetite, prompting investors to buy back the European currency.

Signs of solid demand at a Spanish sovereign debt auction overnight helped ease fears that the nation could suffer a Greek-style crisis, dealers said. That gave a slight tailwind to stock markets, and Japan's benchmark Nikkei 225 Stock Average was up 0.1% in early afternoon trading. However, by around 0530 GMT the Nikkei had slipped into negative territory, down 0.1% at 9985.28.

The European single currency gained to as high as JPY112.81 and USD1.2414 compared with JPY112.72 and USD1.2388 in New York late Thursday. As of 0450 GMT, the euro was at JPY112.65 and USD1.2406.

As of 0450 GMT, the U.S. unit exchanged hands at JPY90.78, compared with JPY91.00 in New York late Thursday. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 85.537 from 85.657.

Pound fate hinges on Tuesday's emergency U.K. budget. The currency has proven to be extremely sensitive to ratings news in recent months, and the budget is seen as the big push to fix the country's public finances and ensure that the country's triple-A credit rating remains in place.

The Australian dollar surged to levels not seen in a month on Friday on the back of rallying equities in the region, though an increased appetite for risk-sensitive assets largely skipped over the local bond market.

Market expectation

The euro could gain to JPY115.00 and USD1.2500 next week, while its downside is likely limited at JPY110.00 and USD1.2000, said traders. But investors will likely remain cautious because the European currency could be sold off quickly if signs emerge that the continent's debt problems continue to deepen, he said.

Meanwhile, the yen could weaken in the long-term after Japan's Prime Minister Naoto Kan suggested Thursday he wants to lift the nation's sales tax to 10% from the current 5% over the next few years.

EURCHF may set an all-time low below 1.3735 before the weekend after the SNB effectively gave the green light to short-term players to continue pushing the cross down.

Next week's emergency U.K. budget is make-or-break time for sterling because it will determine whether the country holds onto its cherished triple-A credit rating.

European stocks are expected to open a touch higher Friday, after Wall Street managed to close in positive territory, as investors continue to take heart from Thursday's successful Spanish bond auctions.

Disclaimer: the data made available by Dukascopy (Suisse) SAis for informational purposes only. Publication of this data by Dukascopy (Suisse) SA does not constitute provision of investment advice and Dukascopy (Suisse) SA assumes no responsibility with regard toany information, forecast or recommendation herein contained and assumes no responsibility with regard toany losses resulting from any activities conducted the basis of this data, including any investment decisions.

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