Daily Market Outlook by AceTrader

Dollar falls against yen on U.S. rates outlook-22/02/2010 22:47GMT

Versus the Japanese yen, the greenback rebounded to an intra-day high of 91.90 after Friday’s decline on the support from huge Japanese Investment trust (‘Toushin’) demand (250 billion yens, i.e. $2.72 billion issue, from Mizuho under Shinko Investment on Monday).

However, the greenback retreated from the Asian high on talk of sizeable offers by Japanese exporters and seasonal repatriation talk as firms with poor cash flow domestically may repatriate funds from overseas and there may be the need among corporates to hedge their foreign exchange exposure. The pair declined further to 91.02 low in NY mid-day on active cross-buying in the yen (gbp/jpy fell from 142.18 high to 140.83 low). The dollar remained under pressure in U.S. afternoon and closed at 91.14 as Fed Bank of San Francisco President Janet Yellen said the U.S. economy still needs low interest rates to gain strength.   
Euro extended Friday’s rally on German weekly newspaper Der Spiegel’s report on Saturday that German finance ministry had plans for the EU to provide aids for Greece. Although denial by German official prompted price to retreat, renewed buying interest pushed price marginally higher to an intra-day high at 1.3655 in Asia. The single currency then retreated on profit taking and moved lower afterwards due to worries about heavily indebted eurozone countries, hitting an intra-day low at 1.3574 in U.S. morning on active cross-inspired selling in euro (eur/jpy fell from 125.24 high to 123.65 low) before stabilizing.  
Economic data to be released on Tuesday include Japan BoJ meeting minutes in January, Germany Ifo index in February and U.S. consumer confidence in February.