Yen Gains as Merkel and Hollande Meet Prior to EU Summit

Submitted by Anonymous on Wed, 27/06/2012 - 09:18
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Tradervox (Dublin) - Most economists have dismissed the EU Summit scheduled to start on Thursday claiming the meeting will not push Europe towards crisis resolution. The yen has advanced against all of its 16 major counterparts as German Chancellor Angela Merkel and French President Francois Hollande meet today before the EU Economic Summit starts tomorrow. Yen rose to one week high as low expectation from the EU Summit gripped the market increasing the demand for safe haven assets. The euro has remained down against the greenback after declining since the start of the week.

Sentiments that the yen will continue to rise as demand for safe haven currencies increase are shared by Daisuke Karakama who is a Market Economist at Mizuho Corporate Bank Ltd in Tokyo who suggested that there is nothing to expect from the summit which has spurred risk aversion in the market. Europe crisis has led to 3.6 percent decline of the region’s currency against the US dollar since the end of last year. The EU summit to be held in Brussels is the first meeting by the region’s leaders since the election in Greece. Hollande and Merkel have meet to discuss ways to handle the crisis as they have proposed two different ways to settle the crisis.

Merkel has continued to oppose the shared debt proposition supported by the French President F. Hollande. With these differing positions, economists such as MacNeil Curry have suggested that the 17-nation currency may drop to 23-month low levels. The yen advanced by 0.1 percent against the euro to exchange at 99.20 at the beginning of Tokyo trading session after it gained 0.9 percent against the currency yesterday in New York trading at 98.75. The Japanese currency increased 0.2 percent against the dollar to trade at 79.40 per dollar. The euro traded at $1.2492 after it lost 0.6 percent over the last two days.

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