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US dollar makes gains against main peers
In the Asian trading session on Monday, the US dollar gained in value against its counterparts. With an economic slowdown in many regions of the world, currency traders are buying US dollars as a safe haven asset.
The US dollar was trading at $1.2295 to the euro at 12:11 PM Tokyo time. The USD/JPY rate was 78.33 yen, with the US dollar gaining 0.1%. The New Zealand dollar declined to 81.81 US cents, and the Australian dollar traded in at $1.0564. These two currencies may decline against the US dollar if China’s economic slowdown continues. The US dollar is expected to gain further this week as there is also no solution yet for the European fiscal crisis.
Euro declines against most peers with no solution on debt crisis
The euro declined against the US dollar in the Asian trading session on Monday, amid signs that there is no immediate solution to the European debt crisis. Additionally, possible global economic slowdown woes also led to traders selling the euro. The EUR/USD trading rate was 1.2295. The euro also declined against the Japanese yen by as much as 1.1%, and the EUR/JPY rate was 96.17. The GBP/EUR rate was 1.2755.
Analysts are forecasting that data will show the Eurozone economy contracted for a second successive quarter by 0.2%. When that data is published, then the euro is likely to drop even further. Already, German officials have stated that the outlook for faster European growth is fizzling out.
Yen declines against US dollar
During the Asian trading session on Monday, the yen gained versus the euro but declined against the greenback. 96.17 yen fetched a euro, while 78.33 yen fetched a US dollar.
Domestic news for Japan, however, was not so good. Most Japanese shares declined on the news that Japan’s economy expanded below expectations. This was attributed to weakening exports and less spending by consumers. Weakening exports are a direct consequence of a higher yen. Even Japan’s atomic power agencies lost USD 46 billion since the time of the tsunami.
Still, it is expected that the rate of the yen will continue to remain high. This is because investors would be selling the euro and buying safer currencies such as the US dollar and Japanese yen.
Oil prices rise on US economic growth expectations
On Monday, oil prices registered an increase in New York on speculation that economic growth in the US may show an improvement. Iraq is also raising its output of oil to 3.4 million barrels a day, which is now more than that of Iran and Kuwait.
Crude oil for September delivery on the New York Mercantile Exchange was trading at $93.74 per barrel, up by 87 cents. In London, Brent crude oil for September settlement was trading at $113.75 per barrel, up by 80 cents.
Oil analysts are bullish that the price of the commodity will increase further in the week. There have been some tensions in the Straits of Hormuz, and the speculation of a supply gap would send prices up as well. However, a supply blockage from the Straits of Hormuz is highly unlikely, according to analysts.