Forex Yen eases from 3-yr high vs euro as stock markets rise

by **Cals** Tue 01 Mar 2016, 18:38

Forex
Yen eases from 3-yr high vs euro as stock markets rise
By Reuters / Reuters | March 1, 2016 : 4:57 PM MYT

LONDON (March 1): The yen slipped from a three-year high against the euro on Tuesday as risk trades were boosted by stabilising stock markets.
Asian stock markets, including that of China ended higher, while European shares rose in early trades, all of which dimmed appetite for the safe-haven yen.
The Chinese yuan also edged higher, after the central bank fixed a higher mid-point for the onshore currency, a move that helped to calm nerves in the foreign exchange market and bolstered overall risk sentiment.
This, despite China suffering a seventh straight month of decline in manufacturing.
The dollar was up 0.5% against the yen at 113.13 while the euro was also higher at 122.92, recovering from a low of 122.085 struck earlier in the Asian session, its lowest level since April 2013.
"The disappointing data from China is keeping alive hopes of more stimulus and that is helping overall risk sentiment and putting the yen under pressure," said Yujiro Goto, currency strategist at Nomura, London.
On Monday, the People's Bank of China announced a cut in the amount of cash that banks must hold as reserves — the reserve ratio requirement — by 50 basis points. It frees up an estimated US$100 billion in cash for fresh lending and some analysts now expect fiscal stimulus from Beijing to shore up the economy.
The Japanese currency saw its best month in February since late 2008, buoyed by volatile stock markets that have made a horrible start to 2016, expectations of slowing growth in China and a view among global investors that major central banks are running out of ideas to spur growth and boost inflation.
The euro stayed under pressure against the dollar and the pound after a February reading on euro zone inflation proved weaker than expected. The euro was 0.1% lower at US$1.0861 after falling to a four-week low of US$1.0859 on Monday.
Since peaking at US$1.1377 on Feb 11, the euro has been losing ground as investors bet the European Central Bank (ECB) will act at its March 10 policy review.
"Inflation is now negative throughout the big four euro zone economies... that is seen to mandate a strong response from the ECB on 10 March," noted Ray Attrill, global co-head of FX strategy at National Australia Bank.
The Australian dollar was up 0.5% at US$0.7175 , after the Reserve Bank of Australia's held interest rates at a record low 2%.