Yen Tumbles on Lower Demand for Safe Havens!

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USD

US dollar weakens against main peers

The US dollar weakened against its major peers in the Asian trading session on Tuesday. This was amid speculation that Ben Bernanke, the US Federal Reserve Chairman, will signal that additional monetary easing is required. Bernanke’s half yearly report on the economic and monetary policy is expected to be the platform where this indication will be made.

The greenback weakened by 0.1% against the euro, and was trading at $1.2283 per euro (as of 6:47 AM London time). The USD/JPY rate was 78.93 yen. Against the Indian rupee, the US dollar fetched 55.16 rupees. The US dollar was at $1.5655 to the British pound. The best performing currency against the US dollar was the South African rand, which gained by 0.8% and was trading at 8.20 rand per dollar. The Australian dollar was trading much higher versus the greenback at $1.0249, a rise of 0.2%.

EUR

Euro surprisingly appreciates against US dollar

The euro surprisingly appreciated against the US dollar in the Asian trading session on Tuesday. The EUR/USD trading rate was $1.2283. Against the Japanese yen, the euro was trading lower at 96.95 yen. The EUR/Indian rupee was trading at 67.76 rupees.

Europe’s debt problems have ensured that Spain remains in recession. Inflation in the Eurozone is also at its lowest since February 2011. This may be taken as a negative sign, as it shows lack of prospects in the market, with slowing factory output. Further European chaos is highly likely, so traders are keeping a bearish view on the currency. There are also analysts who feel that Italy may leave the euro before Greece. The entire picture is thus of uncertainty.

JPY

Yen falls against most currency counterparts

In the Asian trading session on Tuesday, the Japanese yen unexpectedly fell against major peers. This was on the back of falling retail sales in the US – a major market for Japanese exports. The USD/JPY rate at 6.47 AM London time was 78.93 yen, and the EUR/JPY rate was at 96.95 yen.

Japanese stocks also fell, and the Topix Index capped a 2-year high in terms of losing streaks, after falling 0.4%. The lack of intervention from the Bank of Japan is keeping investors worried, but still whenever the euro is doing badly, then eventually they turn to buy the yen as a safe haven. This safe haven quality of the yen ensures that the rate hardly depreciates to very low levels.

Crude oil

Crude oil trades at near 7-week high

There was sentiment in the oil markets on Tuesday that US crude oil stockpiles would decline, and that problems with Iran would escalate, with a possible blocking of the Strait of Hormuz. Oil was thus trading near a seven week high.

On the New York Mercantile Exchange, crude oil for August delivery was trading at $88.53 per barrel, higher by $0.10. In London, Brent crude oil for September settlement was at $103.49 per barrel, higher by $0.12.

Experts feel that the volatility in the oil markets will continue for some time. There have been wild swings between gains and losses recently.

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