Dollar wilts as Euro rides on surprising demand linked to cross-border deal

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Dollar wilts as Euro rides on surprising demand linked to cross-border deal

On Friday, the 12th of April 2019, the American Dollar index closed the day down by 0.32 percent at 96.85, against a basket of six major currencies on average, while the US currency fell against four of six major currencies including Euro.

No matter how surprising it may sound, earlier on the Asia-Pacific morning trading hours, the euro zone currency had begun to climb out of the blue, a curious move, which might have been driven by a currency demand rising from a Japanese lender’s plan to purchase a multi-billion dollar aviation financing business based on Germany, multiple dealers with knowledge regarding the subject matter revealed on Friday (April 12th).

Besides, China had also posted signs of financial stabilization, as its March export rose to a five-month high, while a robust start of US corporate earnings season had also increased risk appetite for riskier assets. After a surprise bull-run, euro, the common currency closed the day 0.4 percent higher against American dollar at $1.1295, its highest level since March 26th.

Demands of euro had raised in the face of growing speculation of Mitsubishi UFJ Financial Group’s purchase of Germany’s aviation financing business, DZ bank, at least three dealers with knowledge over the subject matter revealed.

Despite today’s (April 12th) broadened gain, citing a weaker euro outlook on longer term, Chief forex strategist at Scotiabank in Toronto, Shaun Osborne wrote in a client note, “The euro was well-supported in the Asian session on Japanese demand on the crosses but the euro has also looked quite ‘cheap’ in broader terms in recent weeks and still looks – in our opinion – a relative bargain around the 1.12 area”.

Amid an interesting forex market which reminded the traders of identical scenarios on a more frequent basis one year earlier, safe-haven currencies such as Swiss franc and Japanese Yen, both had shredded off more than 0.30 percent of their earlier gains.