U.S. dollar drops sharply versus euro, yen: Marketwatch

30.05.2013 12:12
U.S. dollar drops sharply versus euro, yen: Marketwatch

YEREVAN, May 30. /ARKA/.  The dollar fell sharply against major rivals Wednesday, giving up the previous day’s gains made against the yen, in a round of apparent profit-taking.

The dollar USDJPY -0.48% traded in recent action at ¥101.10, down from around ¥102.31 late Tuesday but near Monday’s level of ¥101.09.

The dollar during Tuesday’s session snapped a three-session losing streak against the yen.
“There’s a big shift. A lot of that shift came leading into the North American open and really just seemed to be flow-based,” said Camilla Sutton, chief foreign-exchange strategist at Scotiabank. “Most currencies have retraced their weaknesses; over-long positions are just being unwound,” she said. A long position on a currency assumes the currency will rise.

Movement on Wednesday was prompted by technical aspects — such as traders correcting positions — rather than by economic data. U.S. data have been a key driver in financial markets as strong data lend support for a potential tapering of the Federal Reserve’s monetary easing. The Fed currently buys $85 billion a month in mortgage and Treasury debt.

Eric Rosengren, president of the Federal Reserve Bank of Boston, said Wednesday a modest reduction in the pace of quantitative easing would make sense after a few more months of improvement. Quantitative easing is understood to weigh on the dollar.

The ICE dollar index DXY -0.23% , which measures the greenback’s performance against six other major currencies, exchanged hands at 83.68 in recent action compared to 84.266 Tuesday.
The WSJ Dollar Index XX:BUXX -0.29% , a gauge of the currency’s moves against a slightly wider basket, slid to 75.27 from Tuesday’s 75.84.

On Wall Street Wednesday, U.S. stocks fell sharply, with the Dow industrials DJIA -0.69%  retreating from a record closing high.

Benchmark 10-year Treasury yields 10_YEAR +0.14%  slipped to 2.14%; they had risen to a 13-month high in the previous session following strong economic data.
“We’re going to see some price movements that really don’t make sense because we’re coming up to month’s end,” said Dean Popplewell, chief currency strategist at Oanda Corp. –0--

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