BT: Dollar and Yen surged broadly on Monday as investors close risky assets in higher-yielding currencies
The Dollar scaled a fresh 13-month peak versus the euro on Monday, while the Yen surged broadly as investors dumped risky assets amid anxiety over the lack of a coordinated global response to the credit crisis.
Traders drove the EurUsd below 1.3500, on a pessimist view after this weekend decision by leaders of Europe's four biggest economies against a coordinated bailout plan. In addition, European governments were forced to rescue large banks and protect ordinary depositors.
The strong and latest risk aversion, which saw heavy selling of stocks globally, put the Yen on track for its largest one-day gain versus the Dollar since the Asian crisis in 1998 and its strongest day against the Euro since the launch in 1999. Both the Dollar and the Yen rallied sharply against higher-yielding currencies such as the Australian and New Zealand dollars as investors are closing riskier trades.
EurUsd dropped 2% to 1.3520 after posting 1.3443, its lowest since late August 2007. EurJpy dived to 135.04, a 3-year low. It was last down 5.41% to 137.30. UsdJpy sank to a 4-1/2-month low of 100.23. It was last trading down 3.6% at 101.55. UsdChf rose 1.65% to 1.1473. GbpUsd dive 1.63% to 1.7431 after having posted 1.7336 low.
European banks have been hit hard by the fallout from a crisis that began in the United States when the housing market collapsed and bad mortgage debts multiplied. More European governments offered bank deposit guarantees as regulators from Washington to Seoul scrambled to contain the deepest global financial crisis in 80 years. The moves in Europe were in stark contrast to the situation in the United States, where Congress finally passed the government's $700 billion bank rescue plan last Friday. Analysts said the flexibility that the bailout provides the US economy would help support the Dollar. But the sharp drop in stocks on Wall Street, which pushed the Dow Jones industrial average to close below 10,000 for the first time in four years, pressured the Dollar against the Yen.
Other large moves: AudJpy plunged to a 4-year low of 70.31 before ending at 73.28, -10.15%. As Well AudUsd lost 6.81% to 0.7216, having posted 0.6991 low ahead of RBA aggressive 100pips interest rate cut this morning. NzdJpy tumbled as low as 52.66, a 6-year low, and NzdUsd dived 4.41% to 0.6323.