Yen gains against euro, greenback

Yen gains against euro, greenback

Story link: Yen gains against euro, greenback

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French prime minister Dominique de Villepin made remarks Tuesday that sent the euro down for a time before recovering later in the session. Mr de Villepin said that he believes that the European Central Bank cannot be allowed to be the sole determiner of exchange rates for the euro. The remarks, which came during a meeting with subcontractors for Airbus, were widely interpreted as meaning that the prime minister thinks the euro should be weaker. Analysts were surprised that the remarks had as much of an effect on currency markets as it did, since Mr de Villepin doesn’t have power to affect the exchange rate.

Apparently most investors came to the same conclusion, since the euro recovered quickly from the losses, ending up about the same versus the US dollar at $1.2809 and adding 0.4 percent in relation to sterling to £0.6760. The shared currency was helped by the ZEW index of investor sentiment, which came in at 53.0 for November, much higher than October’s 42.9. The dollar was not helped by lower US producer prices and retail sales, while sterling did not benefit from a UK producer price index that was at 2.4 percent in October when a rise to 2.6 percent had been anticipated.

The yen, meanwhile, was stronger versus both the US dollar and the euro, adding 0.3 percent to ¥150.68 in relation to the euro and gaining 0.4 percent against the greenback to ¥117.70. The Japanese currency benefited from data showing that the Japanese economy expanded more quickly in the third quarter than had been expected, raising the possibility that the Bank of Japan might send interest rates higher before the end of the year.