The euro renewed its march towards $0.90 in Tokyo Monday, December 18, as the dollar and yen suffered on fears for the economic outlook in the United States and Japan.
"Investors are buying the euro on slowdowns in the Japanese and US economies, contrasted with growth in Europe," said Fuji Bank dealer Hideyuki Tsukamoto.
The euro bought $0.8954 around 11:20 am (0220 GMT), up from $0.8947 in New York and $0.8932-35 in Tokyo late Friday.
It rose as high as $0.8999 in Friday's European trading.
The euro was also trading at a four-month high of 100.79 yen, up from 100.40 yen in Tokyo Friday afternoon.
"Investors expect capital flows will return to Europe from the United States towards the year-end," Bank of Tokyo-Mitsubishi dealer Kiyoshi Kuzuhara said.
US-bound capital flows by European companies had been a core reason for the euro's slide against the dollar since its birth in January 1999, which has now reversed with European economic growth on the mend.
"Investors have also become more pessimistic about the Japanese economy since the Tankan survey," Kuzuhara added.
The Bank of Japan's quarterly Tankan survey of business confidence showed disappointing readings last Wednesday.
The dollar meanwhile bought 112.56 yen at 11:20 am, down slightly from 112.60 yen in New York but up from 112.37-40 yen in Tokyo late Friday.
"Investors are waiting to see the outcome of the FOMC which is expected to change its inflation bias to neutral," Fuji Bank's Tsukamoto said.
The Federal Reserve's open market committee meets on Tuesday to set US monetary policy, and is expected to shift to a neutral stance rather than signalling the prospect of higher interest rates.
Tsukamoto said "the market has already factored in the bias change," on signs that past rate hikes by the Fed have done their job in curbing growth and inflationary pressure.
A rate cut is not expected at the FOMC meeting.
"The market has already priced in those expectations," said a dealer at BNP Paribas in Singapore. "I don't think we'll have a big surprise."— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
