USD

US dollar emerges stronger against euro and yen

Investors have started to go back to the US dollar since last week, when the Federal Reserve held back quantitative easing and instead continued its ‘Operation Twist’ policy.

The dollar is likely to stick to its recent ranges this week. The European Union summit beginning on June 28 may provide some greater movement for the dollar against the euro. Otherwise, the sentiment is much the same as it was last week.

EUR

Euro drops to lowest level in 7 days

In Monday’s Asian trading session, the euro dropped to its lowest level in 7 days, amid concerns of Spain and Italy selling debt on Tuesday. It was trading at $1.25 against the US dollar, a drop of 0.2%. Against the yen, the euro dropped by 0.3% and was trading at 100.77 yen (at 12:54 pm Tokyo).

Last week, the euro had made gains but this week may be different. German consumer confidence data is expected on Monday. If it is lower than expectations, then again the euro will be affected negatively. There is one big event scheduled for this week (on 28 June) though, which may affect the euro. This is a 2 day summit of European Union leaders, where discussions on how to resolve the European fiscal crisis will be held.

JPY

Yen at lowest levels in 2 months against US dollar

The yen reached its lowest levels in 2 months against the US dollar. This was on speculation that a plan to increase Japan’s sales tax will only deepen rifts in Japan’s ruling party.

Against the US dollar, the yen was trading at lows of 80.34. The euro was trading at 100.77 yen. As a result of the weak yen, stocks in the Nikkei are also likely to gain in the short term.

The weaker yen comes as a boost for Japan’s exporters, who have been suffering due to the earlier high rates of the currency. A weaker yen will also enable investors to buy blue-chip stocks in Japan’s stock exchanges.

Crude oil

Oil prices rise due to production halt

Oil prices rose on the news that crude oil production closed at the Gulf of Mexico due to the tropical storm Debby. Signs of a possible economic stimulus for China’s economy by the Chinese Central Bank also made oil experts bullish on the future.

There have also been reports of Norway’s output of oil being affected with a strike from offshore workers.

In electronic trading on the New York Mercantile Exchange on Monday (1:39 pm Singapore time), oil for August delivery increased in price by $0.39, and was trading at $80.16 a barrel. It is worthwhile noting that oil prices have fallen by a huge margin in 2012 so far, and in this quarter, they have fallen by 22%.

In London, Brent crude for August settlement was up by $0.38, and was trading at $91.36 a barrel.