Euro falters after brief rally, gold gains
Tokyo, October 5, 2011
The euro faltered on Wednesday as macro funds and Tokyo exporters piled pressure on it by taking profits after an overnight rally, but charts suggested recent heavy selling could ease for now.
Investors were sceptical even though European finance ministers agreed on Tuesday to safeguard their banks from the debt crisis with more doubts emerging whether a planned second bailout for Greece would go ahead.
Underscoring the fragility of risk sentiment, Asian bourses failed to take their cue from a late rally on Wall Street, prompting macro funds to continue unwinding positions funded in dollars and yen.
As a result, the euro dipped 0.4 percent to $1.3292, not far from a nine-month low of $1.3145 plumbed the day before. It also slid towards a decade low on the yen, shedding 0.6 percent to 101.92 yen .
US gold futures gained 1 percent to above $1,630 an ounce on Wednesday, driven by a return to bargain hunting after prices dropped the previous day.
"Macro funds are trying to offset some of the huge losses made on stocks this year by taking profits or cutting losses on their positions in the euro and the Aussie," said Tsutomu Soma, a senior manager at Okasan Securities' foreign securities department in Tokyo.
Soma suggested that despite the heavy selling, a brief corrective rally in the euro to around $1.34 could not be ruled out after the currency bounced on Tuesday from levels which, had they been breached, would have signalled an acceleration of its decline.
The dollar drifted down to 76.65 yen , above Tuesday's low around 76.51 yen, with strong bids seen supporting the pair below that level.
The Australian dollar fell 0.4 percent against the yen, at one point dipping as low as 72.64 yen , with macro funds unwinding their positions funded in the yen, largely ignoring positive Australian retail sales numbers. The Aussie slipped 0.2 percent versus the dollar to $0.9530, not far from a one-year low of $0.9388.
US gold added $15.8 an ounce to $1,631,8 by 0303 GMT, after rising as high as $1,636.50 ounce. Spot gold rose $9.43 an ounce to $1,629.35 an ounce. - Reuters