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Euro and Dollar Weaker Against Yen Because of Profit Taking and China Deficit

By Theodore Espiritu - Posted on 12 March 2012

The Yen grew stronger than both the Euro and the US Dollar during Asian trading after investors cashed in on recent gains brought about by US employment statistics showing 227,000 additional jobs. With the strong employment and improving economy, the Federal Reserve is less likely to buy back bonds to stimulate the economy.

The China trade deficit and doubts on Europe's fiscal health weighed down on the Euro. The conclusion of Greece's debt exchange with private creditors was seen as a credit event by the International Swaps and Derivatives Association and further brought down the single currency. Also, there is still continued concern over peripheral countries like Portugal. China posted a trade deficit of $31.48 billion last month from $27.28 billion surplus in January.

Investors will now be focusing on the policy meeting of the Bank of Japan as well as the interest rate decision of Federal Open Market Committee for March on Tuesday. Analysts think that any further easing would be unlikely after the asset-purchasing program led to the Yen's recent weakness.

The US Dollar index was up to 80.077 from 79.969. The dollar index measure the dollar against a wide basket of currencies that include the Yen and the Euro.

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