Yen and pound pressured as euro remains resilient

The yen suffered losses in Asia today, having fallen to a seven-month low against the dollar, while the pound also endured a tough time after the Bank of England’s February policy meeting saw less change than expected, reports Reuters.

This helped the euro remain steady, even after Wednesday’s PMI surveys suggested that the eurozone could fall back into recession and with doubts still lingering over Greece’s recent bailout deal. The yen was 80.30 to the dollar, after having risen to 80.406 – its highest point since July. The dollar has climbed almost six per cent since being at 76.00 at the beginning of February.

The yen’s weakness is partly due to the Bank of Japan’s easing last week and increasing momentum as important support levels give way, triggering more selling in the yen.

The market took aim at the pound too, after minutes of the Bank of England’s policy meeting revealed that two officials had been in favour of a bigger increase in quantitative easing this month than was agreed in the end. This was viewed as increasing the chances of further asset-buying to support the fragile economy.

The sterling fell broadly due to this. It dropped to $1.5661, some distance from the high of $1.5880 seen earlier this week. It declined to 125.81 on the yen, from a high on Wednesday of 126.55. The yen and sterling’s weakness helped the dollar jump by 0.2 per cent against a basket of key economies. However, the euro was resilient and capped the dollar index by holding at $1.3245.