By William L. Watts and Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) ? The yen climbed sharply versus the dollar and euro Friday after Japan?s finance minister said the currency?s fall had caught the government by surprise ? a remark the ministry later described as a misstatement.
The dollar /quotes/zigman/4868099/sampled USDJPY -0.9940% traded at 92.75 yen in recent action, down from ?93.41 in North American trade late Thursday. The dollar had bought as much as ?93.70 early Friday. For the week, the greenback is little changed versus the yen.
The euro /quotes/zigman/4868097/sampled EURJPY -1.2491% fetched ?123.93, down from around ?125.32. For the week, the euro has lost more than 2% versus the yen.
Week ahead: Currency wars at G-20
Currency wars are likely to dominate the G-20 meeting in Moscow even if most countries will try not to make any explicit accusations. .
On Friday, during a parliamentary session, Japan Financial Minister Taro Aso said the dollar had ?abruptly risen to the ?90 level from the previous ?78-?79 level in a manner we didn?t anticipate.?
Later, however, a finance ministry official said Aso had meant to say the yen?s drop had been ?fast paced? rather than unexpected. See: Japan: Aso meant to say yen's fall 'fast-paced' .
Combined with indications Japanese exporters are starting to re-emerge as yen sellers, Aso?s comments were ?sufficient to drive a stop run down to a low of ?92.17 before a partial retracement,? said Adam Cole, currency strategist at RBC Capital in London.
/conga/story/2013/02/rotation.html 248995Aso?s remarks certainly don?t imply the yen?s fall is unwelcome, ?but does call into question the ?95-100 range [versus the dollar] that many were beginning to talk of? as a government objective, Cole said.
Taking a look at the bigger picture, seasonals are ?in favor of yen strength,? with March representing the end of Japan?s fiscal year, and the yen typically strengthening from mid-February through late-April,? said Christopher Vecchio, currency analyst at DailyFX, in an emailed note.
Given that, ?we very-well may be on the verge of the next bout of risk-aversion if political concerns stemming from Italy and Spain boil over,? he said. ?A drop back to ?120 in EURJPY can?t be ruled out at [the] present time.?
Euro falls vs. dollar
The euro, meanwhile, moved lower against the dollar.
European leaders reached an agreement Friday on a seven-year budget plan for the European Union, European Council President Herman Van Rompuy announced on Twitter without providing details after a final set of negotiations that stretched to around 24 hours. See: European leaders agree on 7-year EU budget deal.
?The EU budget deal, which confirms the EU?s appetite for austerity, provides continued support for the euro bears to bet against the euro based on a weak growth outlook,? said Richard Hastings, a macro strategist at Global Hunter Securities. ?But the market already understands this, so it looks like the budget conversation is a small catalyst in the same general direction.?
The euro had taken a tumble Thursday after European Central Bank President Mario Draghi said policy makers would watch the currency?s appreciation for any sign it is affecting the euro-zone inflation outlook. Draghi also said the euro?s recent rise is a sign of confidence in the shared currency.
He emphasized repeatedly that the ECB was maintaining an ?accommodative? monetary policy. Read Draghi: Euro reflects confidence, but eyeing rise.
The euro /quotes/zigman/4867933/sampled EURUSD -0.2686% , which pushed above $1.37 earlier this week, changed hands at $1.3365 in recent trade, down from $1.3392 in late North American action Thursday. For the week, its down about 2%.
Although down about 2% just this week, the currency is still up nearly 4.9% against the greenback compared with three months ago.
ECB's Draghi knocks euro back a bit
European Central Bank President Mario Draghi helped the euro to reverse some of its recent gains with slightly more dovish comments at his monthly news conference.
?What we note is that the latest data shows the euro-zone is stabilizing. More work is needed, however,? said Evan Lucas, a market strategist at IG Markets.
?Mario Draghi?s ?whatever it takes? comments that came [at midyear] last year was the flash point for the current rally and he is holding true to his word, meaning Europe is going to be a distraction, not a disaster,? Lucas said.
The ICE dollar index /quotes/zigman/1652083 DXY -0.02% , which measures the greenback against a basket of six major global currencies, rose to 80.234 from around 79.721 late in New York on Thursday. The index was about 1.4% higher for the week.
The WSJ dollar index /quotes/zigman/9625991 XX:BUXX -0.21% , a gauge that measures the greenback?s moves against a slightly wider basket of currencies, slipped to 71.53 from 71.66 Thursday.
Among other major currency pairs, the British pound /quotes/zigman/4867886/sampled GBPUSD +0.5416% climbed to $1.5794 from $1.5696, while the Australian dollar /quotes/zigman/4867876/sampled AUDUSD +0.3414% fetched $1.0317, compared with $1.0284.
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William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Follow him on Twitter @wlwatts. Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong. V. Phani Kumar contributed to this report.
Source: http://www.marketwatch.com/story/euro-inches-up-versus-us-dollar-after-tumble-2013-02-08
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