Weakness In Oil Prompted Investors To Turn Back To Yen

Weakness In Oil Prompted Investors To Turn Back To Yen

The dollar dipped against the yen and the euro during the late Asian hours after markets across the globe trimmed their gains due to falling oil prices. It appears that investors grew cautious and are turning to safe haven yen and euro.

Trading lower

USD/JPY fell 0.19% to 113.04 today while the EUR/USD traded marginally lower by 0.02% to 1.1105. The market participants will keep track of the inflation numbers that are due to release later today.

Sensing from the markets, it can be said that the report from the Energy Information Administration (EIA) published yesterday dampened the outlook for oil and ultimately equity markets. As opposed to American Petroleum Institute’s (API) report, EIA said that the U.S. crude inventories increased 2.1 million barrels during the last week. The data contradicted API’s estimates, according to which, oil reserves declined by 3.3 million barrels last week.

ECBs monetary easing hint

In the eurozone, the European Central Bank has reiterated its intention to impose added monetary easing measures in March, if seen necessary, which can keep Euro defensive. According to Masashi Murata, a senior currency strategist at Brown Brothers Harriman, the euro has a further downside as he opined that the impact of any monetary loosing stance will only have a short-term impact on the currency.

At the same time, the diverging policies between the major Central Banks such as the ECB and the Federal Reserve is a source of market volatility, according to experts. Elsewhere, the Australian Dollar slipped steeply against the greenback, falling 0.70% to 0.7107. The weakness in the Australian Dollar came after Reserve Bank of Australia’s board member John Edwards expressed concern over the appreciation of the currency, adding that it is exposed to risks as banks around the world embrace negative interest rates.

GBP/USD slipped 0.07% to 1.4325 as the Pound remains surrounded by concerns over the outcome of EU Summit. Overall, the U.S. Dollar Index stood tall against the major currencies, up by 0.09% to 96.93.