Euro’s rebound stalls

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The euro moved narrowly against the dollar and yen in Asia on Tuesday after bouncing off lows in New York as investors digested news of election defeats for French and Greek ruling parties.

The euro bought $1.3029 and 104.23 yen in Tokyo afternoon trade, compared with $1.3052 and 104.28 yen in New York late Monday. The dollar edged up to 79.98 yen from 79.88 yen.

The euro, which fell below $1.30 to its lowest point in over three months in Asian trade Monday, was likely to be firm on short-covering, dealers said.

“The (euro-dollar) pair unexpectedly failed to drop much overnight despite negative factors for the euro over the weekend,” said Osao Iizuka, head of foreign exchange trading at Sumitomo Mitsui Trust Bank.

“The pair appears to be back in the previous $1.30-1.33 range,” he told Dow Jones Newswires.

National Australia Bank said in a note that “last night's session reflected on the weekend's events and concluded the outcome wasn't so bad.”

“Markets have seen modest reversals in most cases, with European equities higher, the US mixed, (bond) yields and commodities are also mixed,” it said.

In France, Socialist Party candidate Francois Hollande ousted President Nicolas Sarkozy on Sunday, becoming the first socialist in 17 years elected to lead the eurozone's second-largest economy.

In Greece, mainstream parties that supported an EU-IMF bailout of the country lost control of parliament.

The dollar-yen rate was likely to lack clear direction as the US Federal Reserve was expected to stick to its wait-and-see approach on monetary policy, said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

“The Fed's stance...will not be changed, which could make the US dollar/Japanese yen trade directionless,” she said in a note.

The dollar was mixed against other Asian currencies.

It fell to 1,135.40 South Korean won from 1,137.29 won on Monday, to Sg$1.2457 from Sg$1.2460 and to 30.96 Thai baht from 30.98 baht.

The greenback edged up to 42.33 Philippine pesos from 42.29

pesos, to Tw$29.31 from Tw$29.29 and to 9,220.00 Indonesian rupiah from 9,195.00 rupiah. - Sapa-AFP


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