Yen firm, euro and pound hurt by fiscal worries

SYDNEY (BestGrowthStock) – The yen was firm on Wednesday on expectations of a pick up in Japanese repatriation flows before the fiscal year end in March, while the euro and the pound were subdued on fresh worries about Europe’s fiscal health.

Traders said Japanese exporters were seen the selling the euro against the yen in early trade. Many were also hearing talk of robust repatriation inflows in the run-up to the fiscal year-end on March 31.

In early Asian trade, the dollar was trading around 90 yen, having lost over 0.3 percent on Tuesday. Support for the dollar is seen around the 89.30 yen level, which forms the base of the Ichimoku cloud.

Further yen gains could be limited by speculation that the Bank of Japan may take additional steps to ease monetary policy. The BOJ is in the spotlight after the Nikkei newspaper reported on Friday that the central bank was examining easing again and may decide on such a move when it meets on March 16-17.

The euro found support on the yen, steadying at 122.50, having lost nearly 0.6 percent on Tuesday. The euro also inched up against the U.S. dollar, trading just above $1.3600.

The common currency had come under fresh pressure after Fitch ratings agency said it still has a negative outlook on Portugal’s credit rating.

That fed concerns that peripheral euro zone economies may face debt problems similar to those of Greece, where a fiscal crisis has led investors to flee the euro in past weeks.

“The euro has come under pressure with Fitch asserting that it is possible to have a sovereign default in the Euro area,” JP Morgan said in a report. “With little in the way of meaningful data over the coming days, we suspect that FX markets will drift within recent ranges.”

The pound was struggling at $1.5000, having been hit by weak data, and fears around its sovereign rating as well as credit ratings of its banks. Sterling has lost more than 7 percent this year on concerns Britain will be stuck with a political deadlock after the May election.

All in all, the subdued euro and the pound helped the dollar index (Read more about the global trade. ) (.DXY: ) to trade higher at 80.56.

All eyes in Asia would be China’s trade data in February, with analysts forecasting a near 40 percent rise in exports and imports.

Traders say if the numbers disappoint, it could hurt demand for commodity-linked currencies like the Australian and New Zealand dollars.

A senior Australian central banker on Wednesday said that while global risks were worth watching out, the central case remained positive for Asia and Australia.

The Aussie broke past resistance at $0.9150 to trade as high as $0.9160, which was its highest level since January 20.

The kiwi was also firm at $0.7027, having gained nearly 0.4 percent on Tuesday. Both the Aussie and kiwi were also supported by a revival in demand for riskier assets.

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(Reporting by Anirban Nag; Editing by Wayne Cole)

Yen firm, euro and pound hurt by fiscal worries