IMM-Speculators increase bets against U.S. dollar-CFTC

Reuters: [2008-05-09 21:56:00]

    NEW YORK, May 9 (Reuters) - Currency speculators increased 
bets against the U.S. dollar in the latest period, weekly data 
from the Commodity Futures Trading Commission showed on 
Friday. 
    The value of the net short U.S. dollar position rose to 
$8.58 billion in the week to May 6, up from $5.76 billion in  
the previous week. 
    The aggregate U.S. dollar position is derived from the net 
positions of International Monetary Market speculators in yen, 
euro, British pound, Swiss franc, Canadian and Australian 
dollars. 
    
 JAPANESE YEN (Contracts of 12,500,000 yen) 
             5/06/08 week         4/29/08 week 
   Long          69,355               73,485 
   Short         20,620               18,035 
   Net           48,735               55,450 
 
    EURO (Contracts of 125,000 euros) 
             5/06/08 week         4/29/08 week 
   Long          54,383               48,319 
   Short         66,895               69,634 
   Net          -12,512              -21,315 
 
    POUND STERLING (Contracts of 62,000 pounds sterling) 
             5/06/08 week         4/29/08 week 
   Long          13,874               21,296 
   Short         44,311               46,144 
   Net          -30,437              -24,848 
 
    SWISS FRANC (Contracts of 125,000 Swiss francs) 
             5/06/08 week         4/29/08 week 
   Long          19,125               26,625 
   Short         23,262               19,624 
   Net           -4,137                7,001 
 
    CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) 
             5/06/08 week         4/29/08 week 
   Long          48,104               31,816 
   Short         16,392               24,388 
   Net           31,712                7,428 
 
    AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) 
             5/06/08 week         4/29/08 week 
   Long          75,627               60,245 
   Short         10,206                9,780 
   Net           65,421               50,465 
 (Reporting by Lucia Mutikani; Editing by Dan Grebler) 
 ((lucia.mutikani@thomsonreuters.com; 1 646 223 6314; Reuters 
Messaging: lucia.mutikani.reuters.com@reuters.net)) 
Keywords: MARKETS FOREX IMM 
    

EURO GOVT-Bunds catch safe-haven bid, peripherals sell-off

Reuters: [2008-05-09 17:47:00]

By Kirsten Donovan

LONDON, May 9 (Reuters) - Top-quality euro zone government bonds advanced on Friday as sagging share prices boosted the appeal of safe-haven Bunds and as markets weighed the previous day's comments from the European Central Bank.

European equities fell as banks and other financials dragged on the market, while Wall Street dropped as it reacted to the record loss posted by the world's number one insurer American International Group <AIG.N> after the closing bell on Thursday.

Crude oil's surge to a new peak above $125 a barrel also hit stocks, exacerbating fears about inflation and a deteriorating U.S. economy.

Bunds reaped the benefit of safe-haven flows and pushed ahead, with 10-year yields falling to their lowest in three weeks to below the key psychological 4 percent level, helped by some observers perceiving that the ECB had slightly softened its monetary policy stance after keeping rates steady at 4 percent on Thursday.

But peripheral debt, such as that issued by Italy sold off.

"The key flow today has been the ongoing selling of peripherals, especially Italy," said a trader.

"Peripheral spreads have had a good run recently but now stocks are looking a bit wobbly, credit spreads are widening and these bonds trade like a high risk asset nowadays."

At 1528 GMT, June Bund futures <FGBLM8> were 59 ticks higher at 115.12. Two-year cash yields <EU2YT=RR> were down 5 basis points at 3.663 percent, while 10-year yields <EU10YT=RR> were 7 basis points lower at 3.997 percent.

Italian 10-year spreads widened a further 4 basis points on Friday, with Greek 10-year spreads about 3.5 basis points wider.

Euribor contracts from December onwards outperformed the front-end of the 2008 strip which still indicates no chance of an interest rate cut from the ECB this year.

ECB President Jean-Claude Trichet said on Thursday that the bank's Governing Council was unanimous in its decision to leave rates on hold but did not rule out a future reappearance of the word "vigilance" -- a past harbinger of rate rises.

Bank of America said the key issues when thinking about the interest rate outlook are whether economic growth in the euro zone will continue to weaken in coming months, and how the exchange rate of the euro <EUR=> will respond.

Head of strategy Riccardo Barbieri says based on the past couple of weeks the currency could respond "relatively strongly" to an economic downturn and unless food and energy prices fell at the same time, the ECB may be forced to remain on hold.

"It is entirely conceivable that the ECB will remain on hold throughout the credit-market crisis, with money market and bank lending rates perhaps edging down in 2009 by virtue of a tightening in the Euribor/Eonia spread."

The ECB also said on Friday that euro zone banks are making it harder for companies and households to borrow money, clamping down on lending as the credit crisis bites [ID:nL09835231].

Since the global credit crisis hit last summer, banks have found it harder to obtain funds to lend to firms and consumers, and also become more cautious about who they lend to.

The interbank cost of borrowing three-month dollar funds fell at Friday's daily Libor fixing, while sterling spreads notably tightened after the Bank of England on Thursday left rates on hold [ID:nL09633122].

Meanwhile, 2-year swap rates <EURAB6E2Y=> fell to 4.421 from around 4.5 percent before the ECB rate decision, while 10-year rates <EURAB6E10Y=> were at 4.456 from 4.500 percent at Thursday's close.

The 10-year swap spread widened to 46 basis points. ((Reporting by Kirsten Donovan; kirsten.donovan.reuters.com@reuters.net, +44 20 7542 8675))

Keywords: MARKETS BONDS EURO

--------------MARKET SNAPSHOT AT 1536 GMT ------------------     
Futures continuous contract basis      
                   FUTURES          CASH YIELD   
THREE MONTH EURO 95.250 (-0.010)  3.966 (-0.003)  
TWO-YEAR SCHATZ  104.01 (+0.09)   3.669 (-0.046)  
10-YEAR BUND     115.15 (+0.62)   3.993 (-0.074)  
30-YEAR BUND                      4.504 (-0.041)  
 Current levels versus prior European close       
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UPDATE 1-Slovak crown hits record high, seen strong

Reuters: [2008-05-09 17:31:00]

(Adds analyst quote, background)

BRATISLAVA, May 9 (Reuters) - The Slovak crown scaled a new record peak against the euro on Friday, helped by expectations of a strong conversion rate to mark the country's road to adopt the single European currency next year.

The currency has been firming strongly since receiving an invitation to join the euro zone earlier this week. It briefly touched a record high of 31.901 per euro <EURSKK=> in afternoon trade, compared with 32.030 late on Wednesday.

The unit stood at 31.905 per euro as of 1505 GMT.

"A break of 32.0 was only a matter of time. The fact that the euro/zloty cleared today key level of 3.40 could provide the crown with fresh momentum," said Piotr Matys, analyst at 4Cast.

"These levels below 32.0 are certainly attractive for profit-takers, thus we could see some correction, which is likely to be short-lived as we expect that the downside pressure on the euro/crown to prevail," he said, adding the next key level was now at 31.650.

The rate at which Slovakia is going to swap crowns for euros is the last remaining crucial issue for the markets.

Prime Minister Robert Fico, whose government will negotiate the switchover level with European Union authorities, has said he prefers as strong a conversion rate as possible.

The crown has gained 7.5 percent against the euro this year and 5.1 percent over the past 12 months. It now trades 10 percent above its parity in the Exchange Rate Mechanism 2 (ERM-2), the precursor for euro adoption.

(Reporting by Peter Laca and Martin Dokoupil; editing by David Christian-Edwards) ((peter.laca@reuters.com; +421 2 5341 8402; Reuters Messaging: peter.laca.reuters.com@reuters.net))

- For previous updates on Slovak currency moves click on [SKK/]

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Keywords: SLOVAKIA EURO/CROWN

Slovak crown hits record high of 31.901 vs euro

Reuters: [2008-05-09 16:46:00]

BRATISLAVA, May 9 (Reuters) - The Slovak crown firmed to a record high of 31.901 per euro <EURSKK=> on Friday, according to Reuters' dealing system.

The crown, which has been firming strongly since receiving an invitation to join the euro zone in 2009 earlier this week, rose from 32.030 late on Wednesday. It has gained 5.1 percent against the euro over the past 12 months. (Reporting by Peter Laca; writing by Martin Dokoupil; editing by David Christian-Edwards) ((peter.laca@reuters.com; +421 2 5341 8402; Reuters Messaging: peter.laca.reuters.com@reuters.net))

Keywords: SLOVAKIA EURO/CROWN

Sterling mired at 2-mth low vs dlr on UK rate view

Reuters: [2008-05-09 16:33:00]

LONDON, May 9 (Reuters) - Sterling fell to its lowest in over two months against the dollar on Friday as investors looked past the Bank of England's decision to hold rates steady this month and focused on the high possibility of an easing in June. The BoE's monetary policy committee, faced with rising inflation and a sharp economic slowdown, left borrowing costs at 5 percent on Thursday after a 25 basis point cut last month.

But a welter of poor British data from housing to retail sales has left analysts convinced a cut is likely next month, potentially eroding the pound's yield appeal, with more bad news economic seen sapping sentiment further.

"From a currency perspective you could have argued that the BoE could have got it (rate cut) out of the way rather than delaying the inevitable by not moving this week," Rabobank markets strategist Jeremy Stretch said.

"One suspects that come the quarterly (inflation) bulletin next week, the ground will be sufficiently prepared for the June rate cut. I wouldn't say sterling is falling off a cliff but it's certainly on a steep slope," he added.

By 1410 GMT, sterling was down 0.4 percent on the day at $1.9470, having hit $1.9460 earlier -- last seen on February 21 <GBP=>. The euro was up 0.6 percent at 79.26 pence <EURGBP=> edging closer to last month's record high struck at 80.98 pence.

The bank's quarterly inflation report is due out next Wednesday, while further clues on the economic outlook will also come with consumer price index data for April also out next week.

Most analysts polled by Reuters before Thursday's decision predicted rates would fall to 4.75 percent in June [BOE/INT]. (Reporting by Veronica Brown; editing by David Christian-Edwards) ((RM:veronica.brown.reuters.com@reuters.net; Tel: +44 207 542 6745))

Keywords: MARKETS STERLING CLOSE