The yen declined against the euro and dollar as U.S. stock-index
futures rose, prompting investors to curb sales of higher-yielding
assets funded in Japan.
The yen reversed gains from a three-year
low against the euro as futures on the Standard & Poor's 500 Index
advanced following its biggest plunge since the 1987 stock-market
crash. The dollar rose toward its strongest level in more than a year
versus the euro on speculation turmoil in financial markets, sparked by
the global credit crisis, will encourage investors to buy U.S.
Treasuries.
``The yen's very closely following global equities,''
said Lee Hardman, a London-based currency strategist for Bank of
Tokyo-Mitsubishi. ``The moves we've seen in the yen over the last month
have been extreme and in the near term there is a potential for the
currency to weaken.''
The Japanese currency fell against the euro
as S&P 500 futures expiring in December added 0.5 percent. The yen
weakened on speculation that investors will slow carry-trade reversals.
A carry trade is a strategy in which an investor obtains funds in a
country with low borrowing costs and buys assets where returns are
higher.
``People are buying safe-haven assets such as Treasuries
because of fears over the financial-markets turmoil,'' said Lee Wai
Tuck, a currency strategist at Forecast Pte Ltd. in Singapore. ``It's
positive for the dollar.''
Foreign investors increased their
purchases of U.S. assets in August to $30 billion, from $6.1 billion in
July, according to survey of economists. The Treasury Department will
release the data at 1400 GMT in Washington.
EUR/USD: having got support at $1.3350 bounsed back above
$1.3500. Offers spotted at $1.3520 may stall further gains. More
supply at $1.3550/60. Bids lokated at $1.3410/00, stronger at $1.3350.