Dollar gains somewhat as the risk on trading rally slows down
The dollar gained somewhat against the major currencies of the world after soft manufacturing data out of US slowly dampened the earlier session of risk on trading which have been buoyed up in anticipation that debt crisis in Europe may be abating gradually. On Tuesday in the Asian trading, the EUR/USD went down 0.03% at 1.3050.
The uninspiring factory data in Europe and the US has brought down the spirits and for the most part killed off a rally emanating out from the Greek and Spanish economic decisions which is largely seen as encouraging steps towards managing and extinguishing the debt crisis of Europe. Most investors sought safety in the dollar after hearing the news. In the meantime, the greenback went up against the Pound, with GBP/USD trading down 0.02% at 1.6088.
The Dollar was up against the Dollars of New Zealand, Australia and Canada, with NZD/USD trading down 0.02% at 0.8208, AUD/USD down 0.03% at 1.0418 and USD/CAD trading up 0.01% at 0.9953, The Dollar was up against the Swiss franc, with USD/CHF trading up 0.08% at 0.9265 and down against the Yen, with USD/JPY trading down 0.18% at 82.10.The Dollar index, which keeps track upon the performance of the greenback against six different major currencies, was up 0.01% at 79.91
Euro jumps after Greece starts debt buyback
On Monday, the Euro jumped a little bit after the sentiments in the Euro-Zone improved as Greece initiated a debt buyback program. However, part of its gains was erased due to the poor US manufacturing data. The euro bought $1.3051 at 2200 GMT, up from $1.2986 at the same time Friday. Previously, the common European currency had hit $1.3076, its maximum level in more or less six weeks. The euro rose to 107.36 Yen from 107.12 Yen on Friday.
The short position of Yen surges ahead
As the short positions surge, the Japanese Yen is heading mostly on the lower side. There are expectations that the Yen will fall in value, and Forex traders are shorting the currency accordingly. Presently the Yen is moving much against the Pound and Euro, though it is high against the US Dollar right now. But in spite of this, the position of the currency is not stable. Many traders in Forex believe that sooner or later there is going to be a huge drop for the Yen which in turn will induce a massive sell off of the currency.
Assumptions are gaining ground that the Yen will soon drop as it is expected that after the elections in Japan later this month, the new leaders may devalue the currency. Consequently there are a large number of Yen short positions and it makes sense that this currency is on the low as against the Pound and the Euro.
Slight gain in crude oil prices
Crude oil prices finished slightly higher to get gains for the third consecutive session in a row. The latest economic data point out to a better prospect for demand in the near future. The reason for this is due to the bitter political wrangling in the US on the fiscal cliff pertaining to spending cuts and hikes on taxes shows no sign of ending. Prices of crude on Monday touched an all time above $90. Many experts believe that the crude oil prices may go down to $70 per barrel by April, 2013 with the ultimate outfall of the political wrangling ending up with the additional taxes being levied on high income individuals and corporations.
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