Dollar mixed in Asian trade

AP FILE PHOTO

TOKYO – The dollar was mixed in Asian trade Friday after earlier dipping on speculation that an uncertain US economic recovery would spur the Federal Reserve to usher in further easing measures.

The greenback bought 78.56 yen in Tokyo morning trade from 78.59 yen in New York late Thursday.

Against the dollar, the euro bought $1.2256 from $1.2282 while it was also weaker at 96.33 yen from 96.48 yen.

The euro, already under pressure over fears about Europe’s fiscal woes, was also being sold against the Australian dollar which has been strong on higher commodity prices, dealers said.

Junichi Ishikawa, forex analyst at IG Market Securities in Tokyo, said the common currency may fall below $1.2230, “but with a lack of cues, there isn’t much direction”.

Weak US jobless claims and housing data on Thursday stoked expectations for further Fed stimulus, which weighed on the currency.

Also Thursday, Germany’s parliament approved a European aid package for crisis-wracked Spanish banks that aims to prevent Spain’s whole economy from sinking further.

Spain is hoping to get a first slice of 30 billion euros by the end of the month and has in turn agreed to a raft of banking sector reforms and EU inspections to ensure the restructuring process is effective.

Demonstrating the urgency of the rescue, a Spanish bond auction Thursday resulted in sharply higher borrowing costs and lower demand, pushing rates on the secondary market up towards the seven-percent level seen as unsustainable.

The debate in Germany, which is putting up nearly 30 percent of the loans, has revolved around who is liable for guarantees.

However, currency traders were little moved by the aid package since it had been viewed as a done deal, said Masafumi Yamamoto, chief currency strategist at Barclays Capital.