The yen fell against the euro and the dollar on speculation the U.S.
Senate will salvage a $700 billion bank-rescue plan as early as
tomorrow, reviving demand for purchases of higher-yielding currencies
funded in Japan.
The Japanese currency declined the most against the New Zealand dollar
as Asian stocks pared losses. The euro weakened against the U.S.
currency after Dexia SA, the world's biggest lender to local
governments, got a 6.4 billion-euro ($9.2 billion) bailout from
Belgium, France and its largest shareholders to shore up its capital.
High-yielding currencies recouped losses against the Japanese yen after
plunging yesterday when the Standard & Poor's 500 Index tumbled
following the U.S. House of Representatives' rejection of President
George W. Bush's proposals to rescue financial institutions. The index
had its biggest decline since the 1987 crash.
The Australian dollar rose 0.5 percent to 84.24 yen after falling 4.9
percent yesterday. The New Zealand dollar gained 1 percent to 70.72 yen
after dropping 3.7 percent yesterday.
The yen typically declines when demand for high-yielding currencies
rises, as traders put on so-called carry trades. In such transactions,
investors get funds in countries with low borrowing costs and buy
assets where returns are higher. Japan's 0.5 percent target lending
rate compares with 7 percent in Australia and 7.5 percent in New
Zealand.
The euro approached a one-week low against the dollar on speculation
other European banks may need a rescue after Dexia SA and Fortis, the
largest Belgian financial-services company, received
government-sponsored lifelines.
The U.S. House of Representatives voted yesterday 228 to 205 against a
bill that would have allowed the government to buy troubled assets from
banks. Financial institutions have reported losses and writedowns of
$590 billion since the start of last year follwing the collapse of the
U.S. subprime-mortgage market.
EUR/USD the pair was consolidated within the limits of $1,4420-$ 1,4430.
GBP/USD having established a session high on $1,8116, the pair was corrected in area $1,8075.
USD/JPY having established 4 monthly low on Y103,45, the rate has risen in area Y104,80.
At 0900GMT sees September flash HICP data, which is forecast to come in at 3.6% y/y.
US data starts at 1345GMT with Chicago Purchasing Managers' Index (Sep)
. At 1400GMT, the Consumer confidence for September is due.