Yen rose on Tuesday as investors flocked to the Japanese yen as safe haven after U.S. stocks fell sharply due to poor U.S. economic data. DJI fell by 1.43% and ended the day at 10293 due to unexpected drop in U.S. housing sales, which fell by 2.2% to an annual rate of 5.66 million units from an upwardly revised 5.79 million units in April.
Versus the Japanese yen, the greenback remained under pressure on Tuesday and fell from 91.10 to 90.33 in NY afternoon. Aud/jpy dropped from 80.36 to 78.78 while eur/jpy slumped from 112.47 to 110.86.
The single currency briefly recovered to 1.2355 in Asian morning after China's central bank set yuan's mid-point rate at 6.7980 versus dollar, however, euro later fell to 1.2251 at N.Y. opening before staging a brief recovery.
The single currency was pressured yesterday as French bank Credit Agricole cut profit targets for its struggling Greek unit Emporiki on Tuesday and said it would take a 400 million euro write-down as Greece fought its debt load. Cross-selling in euro also weighed on price as eur/gbp fell from 0.8369 to 0.8276 while eur/chf fell to a fresh lifetime low of 1.3586.
Although the British pound remained under pressure in Asia and briefly dropped to 1.4688 after the announcement of U.K. emergency budget, cable rebounded strongly as Fitch Ratings said that Britain's latest budget plan, if adopted, would strengthen investors' confidence and the country's top AAA rating. Sterling climbed back to a high as 1.4859 in New York before retreating due to selloff in U.S. stocks in late US session.
U.K. finance minister George Osborne delivered the government's first budget. Osborne planned to cut current expenditure further of 30 billion pounds per year by 2014/15. The expenditure cuts would be additional to the labour's plans set out by the previous Government. Osborne added there would be no further reductions in capital spending in this budget.
Economic data to be released on Wednesday include: New Zealand Current account , Germany Services PMI , Manufacturing PMI , BoE releases minutes , CBI distribution trade , U.S. New home sales , Fed rate decision and FOMC meeting.