The euro rebounded from a minimum of nine years against the yen after a rise in German business confidence, while the dollar remained under pressure after learning a weaker-than-expected durable goods orders and a U.S. plunge in new home sales.
Investors were reluctant during the session to continue betting on a rise in the yen after Japanese Finance Minister, Yoshihiko Noda, reiterated that the government would react to the movements of the yen as it deems necessary.
Yen fall vs. Dollar
The caution in the market to the yen started on Tuesday when the Nikkei business daily reported that Japan's Finance Ministry would consider unilateral sales of yen if speculators were driving the currency to rise.
"Nothing in politics or the economy justifies the strong Japanese yen. It is merely a case of fear in world markets," said Joseph Trevisani, FX Solutions analyst in Saddle River, New Jersey.Analysts said that statements by Noda offered a chance for investors to give a truce to the escalation of the yen fall.
On the evening of New York, the dollar rose 0.8 percent against the yen at 84.63 yen, but remained near its 15-year low of 83.60 struck on Tuesday.
"The yen has gone far enough fast enough, so we're seeing some consolidation," said Daragh Maher, a strategist at Credit Agricole CIB.
However, the demand for dollars fell after news that durable goods orders in the U.S. rose less than expected in July and that excluding transportation orders suffered their worst drop since January 2009.
"It adds to the series of figures weaker than expected. The risk of entering a growth period of very, very weak, has increased," said Matthew Strauss, strategist at RBC Capital Markets in Toronto.A report showing a collapse in sales of new U.S. homes in July further reduced the demand for dollars.
The euro rose 0.9 percent against the yen at 107.05 yen on Tuesday after touching a minimum of nine years of 105.44.Analysts said the impact of a rise in German business confidence to its highest level in three years was tempered by concerns about the fiscal situation of the euro area, reflected in a widening of spreads between the Irish and German bonds.Standard & Poor's downgraded the credit rating Tuesday of Ireland in a step to "AA-" and warned that the outlook of the country remains negative.
Against the dollar, the euro gained 0.2 percent to $ 1.2651.
The caution in the market to the yen started on Tuesday when the Nikkei business daily reported that Japan's Finance Ministry would consider unilateral sales of yen if speculators were driving the currency to rise.
"Nothing in politics or the economy justifies the strong Japanese yen. It is merely a case of fear in world markets," said Joseph Trevisani, FX Solutions analyst in Saddle River, New Jersey.Analysts said that statements by Noda offered a chance for investors to give a truce to the escalation of the yen fall.
"The yen has gone far enough fast enough, so we're seeing some consolidation," said Daragh Maher, a strategist at Credit Agricole CIB.
However, the demand for dollars fell after news that durable goods orders in the U.S. rose less than expected in July and that excluding transportation orders suffered their worst drop since January 2009.
"It adds to the series of figures weaker than expected. The risk of entering a growth period of very, very weak, has increased," said Matthew Strauss, strategist at RBC Capital Markets in Toronto.A report showing a collapse in sales of new U.S. homes in July further reduced the demand for dollars.
The euro rose 0.9 percent against the yen at 107.05 yen on Tuesday after touching a minimum of nine years of 105.44.Analysts said the impact of a rise in German business confidence to its highest level in three years was tempered by concerns about the fiscal situation of the euro area, reflected in a widening of spreads between the Irish and German bonds.Standard & Poor's downgraded the credit rating Tuesday of Ireland in a step to "AA-" and warned that the outlook of the country remains negative.
Against the dollar, the euro gained 0.2 percent to $ 1.2651.
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