The yen fell from a three-year high against the euro after the
Reserve Bank of Australia lowered interest rates by the most since
1992, fueling speculation central banks plan a flurry of cuts to ease a
financial crisis.
The yen also declined from a six-month high versus the dollar as
Australian policy makers slashed borrowing costs by a full percentage
point, double the reduction forecast by economists. Asian stocks and
the Australian dollar pared losses as investors bet declines in
benchmark interest rates will revive confidence in higher-yielding
assets.
The RBA lowered its overnight cash rate target to 6 percent from 7
percent, adding to last month's quarter-point reduction. Economists
surveyed by Bloomberg News expected a cut to 6.5 percent. The Bank of
Japan today left its benchmark rate unchanged at 0.5 percent.
The Bank of England meets on Oct. 9 to set borrowing costs, a day
before finance ministers and central bankers from the Group of Seven
nations gather in Washington to discuss the deepening credit-market
crisis that has stalled bank lending.
Gains in the euro may be limited on speculation European authorities
will fail to come up with a joint rescue plan for the region's
beleaguered financial sector. The U.S. government has earmarked $700
billion to buy distressed assets from lenders following the collapse of
banks including Lehman Brothers Holdings Inc.
European finance ministers meet at 9:30 a.m. in Luxembourg today. The
German government and the country's banks and insurers agreed on a 50
billion euro ($67.9 billion) rescue of Hypo Real Estate Holding AG on
the weekend after an earlier bailout plan faltered. BNP Paribas SA,
France's biggest bank, agreed to take over Belgian units of Fortis
after a government rescue of the lender failed.
The prospect of a global economic slump has caused investors to
increase bets that the Federal Reserve and the European Central Bank
will cut interest rates.
German factory orders probably fell 4.7 percent in August from a year
earlier, according to the median forecast of economists. The Economy
Ministry is due to release the report today.
EUR/USD after growth at the Asian session, the pair is consolidated within the limits of $1,3515-$ 1,3620.
GBP/USD having established a session high on $1,7650, the rate has receded back in area $1,4430.
USD/JPY after unsuccessful testing the nearest resistance which
is presented by level Y103,30, the pair was consolidated within the
limits of Y102,40-Y103,30.
At 1000GMT Germany releases August manufacturing orders data.
UK data at 0830GMT sees manufacturing output and industrial production for August.
At 1800GMT FOMC Minutes (Sep 16) releases.