Euro stays under pressure

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IOL world currency1 Graphic: Renjith Krishnan.

The euro stayed under pressure against major currencies on Tuesday with traders still searching for a safe place to put their money as European debt problems continued.

The single currency was rangebound in Tokyo morning trade, buying $1.2525 and 99.61 yen. It had been trading at $1.2543 and 99.95 yen in London on Monday. US markets were closed Monday for a holiday.

The dollar was at 79.52 yen, largely unchanged despite Japan and China announcing they would start direct trading in their currencies on Friday to push business between the two Asian economic giants.

The euro fell as investors sold higher-yielding but riskier currencies, said a senior dealer at a major bank in Tokyo.

“The underlying trend remains euro-negative as the region's debt problems haven't improved much,” he told Dow Jones Newswires.

Most European stock markets fell Monday on bank strains in Spain, but avoided a deep slump after opinion polls pointed to a win for pro-austerity conservatives in the upcoming Greek election.

Spanish Prime Minister Mariano Rajoy said Monday the state was struggling to borrow as its risk premium hit a euro-era record and fears spread over its stricken banks.

The dollar may climb if US housing data due later Tuesday shows improvement, said Barclays Bank chief currency strategist Masafumi Yamamoto.

“Last week's housing data were positive, so if today's data follow suit as well, the dollar should be supported.”

Japan's government released a mixed bag of economic data on Tuesday. The unemployment rate edged up to 4.6 percent in April from 4.5 percent in March, while April household spending rose an inflation-adjusted 2.6 percent from a year earlier. - Sapa-AFP

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