Daily Forex Round-Up: Yen (JPY) Erases Gains, Euro (EUR) Touches Nine-Day High

on Nov 20, 2012

Although the euro was off to a bad start on Tuesday with Moody’s (NYSE:MCO) cutting France’s top investment-grade rating, the single currency touched a nine-day high on optimism that Greece will receive additional funding. By contrast, Japan’s currency which was at first boosted by the Bank of Japan’s decision to hold off further monetary stimulus, later erased gains versus the euro and the dollar, with the greenback hitting its highest level versus the yen since April, as reported by Reuters on November 20.

**Yen Erases Advances vs. Euro, Dollar**
On November 20, the Japanese yen recovered from a seven-month low, with the BOJ refraining from further monetary easing. And while the BOJ decision sent the yen higher versus most of its major peers, the yen’s gains were temporary. Bloomberg reported that Japan’s currency erased an advance against both the US dollar and the euro, and traded at 81.42 per dollar and 104.32 per euro at 11:55 a.m. London time. As noted by Reuters, at one point the dollar rose as high as ¥81.66, its strongest level since late April.

**Euro Climbs ahead of Eurozone Finance Ministers Meeting**
The single currency, which initially suffered from Moody’s decision to cut France’s top credit rating, regained some ground later during the day, boosted by optimism that the Eurozone finance ministers would agree on funding for Greece. Bloomberg reported that the euro was little changed at $1.2803 at 7:54 a.m. New York time, after rising to $1.2823, the highest level since November 7.

“This afternoon’s meeting is important, Greece remains an event risk for the euro,” notes Kasper Kirkegaard, a senior currency strategist at Danske Bank (CPH:DANSKE), as quoted by Bloomberg.
!m[Greece Optimism Offsetting Moody’s Downgrade](/uploads/story/860/thumbs/pic1_inline.png)”The bigger news will be if they don’t get their money,” notes Matt Perrier, director of foreign exchange sales at BMO Capital Markets, as quoted by Reuters. You’ll see a much a stronger market reaction than if they do get their money because the market’s probably operating on the assumption that they will.”

**Won Climbs to a 14-Month High**
The Greece-related optimism was also beneficial for the won, with South Korea’s currency rising to a 14-month high to 1,080.95 per US dollar, as reported by Bloomberg. “Risk appetite is supported by some optimism that there will be an agreement at today’s meeting about a second aid package for Greece,” pointed out Kim Dong Young, a currency dealer at Industrial Bank of Korea, as quoted by Bloomberg. “Rising equities on the back of foreign buying are also adding to the won’s strength.”

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**Norway’s Krone Advances, Sweden’s Krona Slips**
November 20 was an interesting day for the Scandinavian currencies as well, with Bloomberg reporting that the Norwegian krone advanced to its strongest level in a week against the US dollar after data showed that Norway’s economic expansion slowed less than estimated. The krone traded at 5.7353 per dollar, after reaching 5.7278, the strongest level since November 9. “Norway’s GDP was slightly above expectations,” noted Danske Bank’s Mr Kirkegaard, as quoted by Bloomberg. “There’s a bit of relief in the market.”
The Swedish krona, however, declined after SEB AB forecast in a report that Sweden’s Riksbank will lower the country’s repo rate to one percent next month and to 0.75 percent in February 2013. The Swedish krona declined 0.5 versus the greenback to 6.7584 per dollar.

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