NEW YORK (AP) – The euro ended New York trading slightly stronger across the board Wednesday, lifted by a wave of buying against the yen following verbal intervention from Japanese governmentofficials.
This rise against the yen also supported the dollar against the Japanese currency, although the greenback was mixed against other rivals in a relatively quiet session devoid of major economic news. And with the Labor Day holiday Monday, currencies are expected to stay within narrow ranges.
The lackadaisical nature of the market was reflected in its lack of reaction to a 2 percent surge in the gold price to a three-month high of $373.80 a troy ounce.
In late New York trading, the euro was quoted at $1.0885, down from $1.0887 late Tuesday. The dollar was quoted at 117.39 yen, up from 117.26 yen late Tuesday. The dollar was quoted at 1.4139 Swiss francs, up from 1.4083, and 1.4025 Canadian dollars, up from 1.3922. The British pound fell to $1.5721 from $1.5726.
The euro’s better performance was a direct result of comments made overnight by Japan’s top currency bureaucrat, Zembei Mizoguchi, who signaled the government is uncomfortable with the yen’s sharp appreciation versus the single currency.
“Much too-rapid moves are undesirable,” said Mizoguchi, Vice Finance Minister for International Affairs, in a veiled reference to the yen’s 8 percent rise against the euro this month alone. “We watch the market very closely and take various measures.”
This prompted investors to cover short euro and long yen positions, pushing the euro two yen higher during European trading than the five-month low of 126.65 yen hit Tuesday.
The other big market mover catching the attention of currency traders was the surge in gold. The metal rallied as much as $10 on the day to that fresh three-month high. Institutional hedge funds, bullion banks and others piled in after it broke key technical resistance at $367 an ounce, dealers said.
“A break above the psychological $400 mark could incite further unrest in both stock and bond markets, unleashing a wave of selling that could spoil chances of a sustainable (economic) recovery,” wrote Jes Black, a currency analyst at MG Financial in a note to clients.
Some analysts think the gold rally could spell trouble for the dollar also. Gold, priced in dollars, is traditionally strong in periods of dollar weakness, as it becomes cheaper on international markets, although lately that correlation hasn’t been holding up.
