Reuters: US Dollar Report: FOREX-Euro edges higher; Aussie touches 1-month low

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FOREX-Euro edges higher; Aussie touches 1-month low Aug 30th 2012, 06:12 Thu Aug 30, 2012 2:12am EDT * Euro edges up vs dollar ahead of Jackson Hole, ECB * Aussie still in the doldrums, hits 1-month low * Little impact on yen from Japan political standoff By Masayuki Kitano SINGAPORE, Aug 30 (Reuters) - The euro clawed higher versus the dollar on Thursday, finding support ahead of a speech by U.S. Federal Reserve Chairman Ben Bernanke on Friday, but the Australian dollar hit a one-month low on ongoing concerns about the outlook for China. The euro also added to its gains after Chinese Premier Wen Jiabao was quoted by state news agency Xinhua as saying China is to continue to buy EU government bonds after fully assessing risks. Investors hope that Bernanke's speech at a symposium in Jackson Hole, Wyoming, on Friday will provide clues on the chances of the Fed embarking on another asset buying programme, or quantitative easing, and whether or not it will take such action next month. Bernanke may end up not dropping any strong hints, but traders are wary of the risk that he might, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. "If he were to say something tremendous, the dollar is likely to come under strong selling pressure," Okagawa said, adding that such uncertainty made it difficult to buy the dollar aggressively at this point. The euro rose 0.2 percent to $1.2556, not too far from a seven-week high of $1.2590 hit last week on trading platform EBS. The euro has also been supported recently by hopes that the European Central Bank will unveil concrete plans next week to help bring down crippling borrowing costs in Spain and Italy. The Australian dollar remained on the back foot, having come under pressure in the past few sessions as investors grow increasingly worried about the outlook for China, Australia's single biggest export market. The Australian dollar touched a one-month low of $1.0318 and was last down 0.1 percent at $1.0338. Talk of buying interest in the $1.0300 to $1.0350 area helped lend some support to the Aussie dollar, said a trader for a European bank in Tokyo. YEN SHRUGS OFF JAPAN POLITICS The yen stayed within its recent range against the dollar, showing little follow-through reaction after Japan's opposition-controlled upper house passed a censure motion against Prime Minister Yoshihiko Noda the previous day. The reprimand is non-binding, but effectively means that the opposition will stop cooperating with the government on most bills, including budget-financing legislation the government needs to sell bonds for this fiscal year's budget. While the government has been able to make ends meet so far, without the necessary borrowing it could run out of money by the end of October. Analysts said the political wrangling is unlikely to have too much impact on the yen, as ruling and opposition parties are likely to eventually hash out a compromise. "The market doesn't seem to think that the chances of Japan facing a shutdown of government functions is a clear and present danger," said Masafumi Yamamoto, chief FX strategist Japan for Barclays Capital in Tokyo. In the end, a deal will probably be reached where the opposition agrees to help pass the deficit-financing bill in October in exchange for an early election, analysts said. The dollar dipped 0.1 percent to 78.64 yen. Link this Share this Digg this Email Reprints

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