The USD gained against the euro as the meeting of the European leaders and the International Monetary fund to reach an agreement for the flow of monetary aid to debt ridden Greece failed in achieving its motive. The traders were very hopeful for a positive from this meeting and had buoyed the euro on Tuesday but it again fell yesterday due to the disappointing news. The Japanese yen is getting to multi month lows due to the announcement of Shinzo Abe to devalue the yen to reach a seemingly unrealistic target in words of the Bank of Japan of 3 percent inflation. Crude oil however gained as the news from the Middle East weighed over all other factors.
Euro falls due to a ‘NO’ to Greece deal
The euro fell on Wednesday when the leaders of Greece failed to reach an agreement to help the country suffering from an economic crisis. The finance ministers of the euro zone, the International Monetary Fund and the European Central Bank were not able to find a sustainable solution to the debt problem of Greece in a 12 hour meeting. The result was a fall of about 0.5 percent in the euro to $1.2748 nearing the two month low it reached last week of the level $1.2661. The gains it had achieved in hope of positive news have been largely reduced. The level is quite near to the one before the Central Bank’s announcement in September to buy the government bonds of Spain.
Japanese yen rebound against major currencies
The Japanese yen fell against all its major competitors on Wednesday. The yen is trading at a considerable low and is at 82.12 against the dollar and 130.63 against the pound. It is at 104.79 against the euro also. Traders are expecting even more easing from the Bank of Japan during its meeting in December. The Yen has come out as the weakest currency in the market since the announcement of Prime Minister Yoshihiko Noda for elections on December 16. The unlimited monetary easing announced by opposition leader Shinzo Abe had largely increased the selling of the yen. He has increased the inflation rate target up to 3 percent. Abe asked BOJ to buy government bonds to help public spending.
Crude oil prices up
Crude oil prices rose on Wednesday buoyed by the news from the Middle East although the gains were subdued owing to the sharp spike in the recent days. Brent crude experienced a sharp rise after the news of a bus explosion in Israel for which terrorism was blamed. Brent was up by $1.09 to $110.92 a barrel. The sweet crude went 70 cents higher at $87.45 a barrel. The retracement experienced on Wednesday was again reversed due to events in Gaza and Israel which led to a highly bullish attitude from traders. China, the world’s largest growing oil consumer, increased its oil imports by 13.8%. Japan however imported 24.5% less crude oil in this period.