Global currencies review (12 June 2013)

On Wednesday the US dollar is trying to offset its heavy losses against the yen seen yesterday. On Tuesday the greenback was subjected to massive sell-offs in favour of the yen after Japan’s central bank refrained from introducing new monetary easing measures, which in turn disappointed investors. Yesterday’s dive was the worst performance by the greenback in three years. The USD/JPY dropped below the 96.00 level, erasing 2.7% of its value. This morning the dollar managed to limit its free fall and it is even trying  a correction at 97.23, though it still remains close to its critical level from yesterday.  Analysts commented that if the Bank of Japan does not intervene, the government campaign to revive the third-largest economy is likely to suffer a defeat.

Meanwhile, the euro advances steadily against the greenback this morning, trading at $1.3332 at the time of writing. The single currency found support despite a looming dispute in Germany’s Constitutional Court on the legality of the European Central Bank’s bond-purchasing programme. The country’s Finance Minister Wolfgang Schauble defended the stimulus measures while Bundesbank President Jens Weidmann opposed them, arguing that they may hurt price stability and the ECB‘s independence. Analysts do not expect a final decision before the parliamentary elections in September; however, the situation is being monitored with caution by officials and market makers alike.


The British pound has also been rising on Wednesday, receiving a much needed boost from better-than-expected results on the country’s Claimant Count Change. The data showed that the number of unemployed people in the UK surpassed expectations for a 5K fall, revealing an actual drop to 8.6K for the three months to May.

The Australian dollar managed to slightly recover its position this morning, after dropping to a three-year low at 0.9338 during yesterday’ session. The AUD/USD was trading at 0.9528 at the time of writing.



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