By TraderVox.com
Tradervox.com (Dublin) – The 17-nation currency dropped further against the yen and the dollar prior to today’s report expected to show that manufacturing and services in the region shrunk last month. Speculation that the debt crisis in the region is hampering growth increased causing the euro to fall against its counterparts. It fell against the yen, as Bank of Japan announced an unexpected additional stimulus to prevent the currency from strengthening. Economists and analysts have indicated that the move by the BOJ policy makers will do little to boost economy as China is still struggling with its economy. The Australian dollar dropped against the dollar after a report from China showed that manufacturing sector in the country is declining.
Talking about the euro and BOJ decision, Joseph Capurso, who is a Sydney-based Strategist at the Commonwealth Bank of Australia, said that the euro is a sell at the current levels. He added that past experience have taught investors and analysts that Bank of Japan’s bond buying expansion does not change the trajectory of the yen or the country’s economy. His comments came as the Markit Economics prepares to release a report showing that the euro zone composite index for manufacturing and services remained low at 46.6 from 46.3 in August. Capurso said that Europe’s economy will get worse and with time it will recover as leaders continue to do all they can to solve the debt crisis.
According to Michael Sneyd, today’s Spanish auction will be a major event as investors will be looking at its performance. Ironically, Sneyd said that a poor performance at the auction will be positive for the euro as it would at more pressure on Spain to ask for bailout. The yen advanced against the euro as BOJ added ten trillion yen to its 45 trillion-yen fund for asset purchases.
The euro plunged 0.8 percent against the yen to exchange at 101.5 yen at the close of Asian trading session. The single currency dropped by 0.4 percent against the dollar to trade at $1.2995. The yen strengthened by 0.3 percent against the dollar to trade at 78.13 per dollar after it added 0.6 percent yesterday.
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