G7 Meetings to Drive Dollar Trading Today
Yen weakening beneficial for Japanese companies' overseas earnings
The rise of the Japanese yen against other currencies has been checked. This is due to the wariness caused by rumours of intervention from the country's central bank. The yen fell against 15 major currencies today.
This weakening has been welcomed by Japanese companies, as it boosts their overseas earnings conversions. Companies such as Mazda, Canon and Sony saw their stocks rise on this news. The Japanese stock market also reacted positively to the yen correction, rising for the first time in 5 days.
As the yen has outperformed the dollar so far in the last week, traders were looking for news like the possible intervention to boost sentiment. A conference call of G7 finance ministers today is not likely to affect the yen, so it is up to the Japanese authorities to intervene.
The USD/JPY trading range is expected to stay between 78.00 - 78.50 levels this week.
US dollar down against major currencies
The US dollar was down against the euro, with the EUR/USD rate at 1.2526. The dollar is also steadily declining against the Swiss franc, after earlier 2012 highs. The USD/CHF (Swiss Franc) is at its lowest level in 5 days, trading at 0.9575 during Tuesday's Asian session.
However, despite the dollar slide, foreign exchange strategists, at investment bank UBS, back the US dollar as the favoured safe haven currency. Their view is based on the outlook that the European Central Bank and central banks of Japan, Australia, England, and Switzerland are all likely to loosen their policy before the US Federal Reserve does.
Quantitative easing is also expected soon from the US Federal Reserve, but experts are unsure as to when that is likely to be carried out.