Demand for the euro remained firm in Asian trading Wednesday, January 3, after the unit broke through the psychological $0.9500 level on increasing fears about the US economy and financial markets.
The euro bought $0.9513 at 3:30 pm (0730 GMT), unchanged from its level in New York and up from $0.9420 in Singapore late Tuesday.
"The market is very bullish on the euro right now, that is for sure," said Lee Boon Keng, market strategist at DBS Group Holdings.
Investors were switching to the euro after US equity markets closed sharply weaker on the first trading day of 2001 and on weak US economic data, dealers said.
The technology-heavy Nasdaq, which lost nearly 40 percent of its value in 2000, turned in its seventh worst daily performance Tuesday, falling 178.66 points or 7.2 percent to close at 2,291.86.
The Dow Jones Industrial Average, home to traditional "old economy" blue chip issues, lost 140.70 points, or 1.3 percent, to finish at 10,646.15.
The euro's strength at the expense of the dollar was bolstered after the release Tuesday of US economic data showing a fall in December manufacturing activity, dealers said.
"The NAPM (National Association of Purchasing Management) index was quite bad so there is a negative effect on the dollar," said a dealer at BNP Paribas.
The closely-watched NAPM index fell four points to 43.7 in December compared with November, its lowest level since April 1991, leading to increased worries the US economy could be heading for a hard landing, dealers said.
Afternoon trading saw some profit-taking in the euro but the unit still held firm, dealers said.
"A fair bit of profit-taking came in but demand for the euro still overwhelms the dollar and the yen," said the dealer at BNP Paribas.
Research house IDEAglobal.com said there the euro is expected to gain momentum, having broken through the $0.9500 level.
"The unit's breach of the key psychological level suggests further upside," the research house said.
The euro traded at 108.95 yen against 108.79 in New York and 107.80 in Singapore late Tuesday.
The dollar was at 114.55-58 yen at 3.30 pm, up from 114.33 yen in New York and 114.50 in Singapore late Tuesday.
Dollar-yen trading was thin due to the public holiday in Japan and the yen was expected to remain around current levels, dealers said. Markets in Japan will reopen Thursday.
"The yen is staying around the 114 level and it's rangebound because people are focusing more on the euro," said DBS Group's Lee. —(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
