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FOREX-Dollar falls, stung by oil surge, weak stocks
Reuters: [2008-05-09 13:32:00]
(Changes byline, adds quotes, comment, updates prices)
By Naomi Tajitsu
LONDON, May 9 (Reuters) - The dollar fell broadly on Friday as sagging stock markets and a jump in oil prices to a record high weighed on the U.S. currency, while fading risk demand boosted the low-yielding yen.
The euro added to gains made the previous session after ECB President Jean-Claude Trichet said on Thursday that inflation remained his top concern, suggesting the bank may not cut interest rates any time soon. [ID:nL08596967]
Crude oil prices jumped to nearly $126 per barrel <CLc1> and European stocks <.FTEU3> fell 1.7 percent, dragged down by financial shares after U.S. insurance giant AIG posted a $7.8 billion quarterly loss due to credit-related investments.
This put into question comments from U.S. Treasury Secretary Henry Paulson, who on Thursday said that he believed the credit crisis was "closer to the end than the beginning" and prompted investors to dump riskier assets.
"We had seen a pick-up in risk appetite earlier in the week on speculation that the worst of the credit crisis was over, but that has reversed, especially given higher oil prices and weaker stocks," said Hidetoshi Honda, currency strategist at Mizuho Corporate Bank.
The jump in oil prices to an all-time high also pressured the dollar lower, as it was seen worsening already weak consumer demand in the United States, one of the world's biggest energy consumers.
By 1010 GMT the dollar was down roughly 0.5 percent against a basket of currencies to 73.145 <.DXY>.
The euro rose more than 0.4 percent to the day's high of $1.5489 <EUR=>, two cents above a two-month low of $1.5284 set on Thursday before Trichet's press conference.
TRICHET TALKS TOUGH
The euro had slipped in the previous session, when some investors were disappointed after Trichet kept up his tough talk on inflation, trimming speculation for a rate cut in coming months despite signs of slowing euro zone growth.
"It's fair to say that speculation that the ECB would deliver a softer stance was why the euro dipped to $1.53, and it recovered as (these expectations) were disappointed," said Niels Christensen, FX strategist at Nordea.
However the euro was still over 4 percent off its record high versus the dollar set in April as a series of soft data keeps the single currency on the back foot.
The dollar was down 0.7 percent against the yen at 102.95 yen <JPY=> as a 2.1 percent fall in Japan's Nikkei 225 <.N225> pointed to increased risk aversion.
The yen rose across the board, pushing higher-yielding currencies like sterling and the Australian and New Zealand currencies roughly 1 percent lower, which analysts said was contributing to dollar losses.
In selling these currencies, investors unwound positions where they borrow low-yielding currencies like the yen to fund purchases of higher-yielding assets.
But Honda at Mizuho said that the yen's recent rally may fizzle out, in part due to speculation China may be adjusting its policy for a strong currency, whose appreciation against the dollar in the forwards market has stalled this week.
Long-term dollar/yuan volatilities <CNY1YO=> soared on Friday, hitting their highest level since Beijing revalued its currency in July 2005. Speculation of a stronger yuan often boosts the yen, which is often used as a proxy for the illiquid Chinese currency.
Sterling was little changed, having fallen to a two-month low of $1.9497 <GBP=> earlier in the day, after the Bank of England kept interest rates on hold at 5 percent on Thursday.
Investors awaited March figures on U.S. trade due at 1230 GMT to see if a weaker dollar has boosted exports from the country. Economists forecast a $61.30 billion deficit, compared with a $62.32 billion deficit in February. (Additional reporting by Simon Falush; Editing by Ron Askew) ((naomi.tajitsu@reuters.com; Tel: +44207 542 5830, Reuters Messaging: naomi.tajitsu.reuters.com@reuters.net))
FOREX-Dollar falls broadly, yen up as risk appetite fades
Reuters: [2008-05-09 10:35:00]
(Changes dateline, byline, adds quotes, comment, updates prices)
By Simon Falush
LONDON, May 9 (Reuters) - The dollar fell broadly on Friday as sagging stock markets and a jump in oil prices to a record high weighed on the U.S. currency, while fading risk demand boosted the low-yielding yen.
The euro added to gains made the previous session after ECB President Jean-Claude Trichet said on Thursday that inflation remained his top concern, suggesting the bank may not cut interest rates soon. [ID:nL08596967]
The euro recovered after falling to a two-month trough below $1.53 as some investors expected Trichet to temper his tough talk on inflation and focus on signs of slowing euro zone growth.
"It's fair to say that speculation that the ECB would deliver a softer stance was why the euro dipped to $1.53, and it recovered as (these expectations) were disappointed," said Niels Christensen, FX strategist at Nordea.
However the euro was still over 4 percent off its record high versus the dollar set in April as a series of soft data keeps the single currency on the back foot.
"We've had a week without much U.S. news and the focus has been on European numbers, I don't think people are convinced about (where euro/dollar) is going until we get some fresh information from the U.S.," Christensen said.
By 0805 GMT the dollar was down 0.5 percent against a basket of currencies at 73.217 <.DXY>.
The euro was up 0.3 percent at $1.5453 <EUR=>, nearly two cents above a two-month low of $1.5284 set on Thursday before Trichet's press conference.
The dollar was down 0.7 percent against the yen at 102.95 yen <JPY=> as a 2.1 percent fall in Japan's Nikkei 225 <.N225> pointed to increased risk aversion.
This led investors to unwind carry positions in which they borrow low yielding currencies to fund purchases of higher yielding assets.
Oil rose to a record high approaching $125 a barrel <CLc1> which also pressured the dollar because the United States consumes huge amounts of energy.
The high-yielding Australian dollar was down 0.4 percent at $0.9405 <AUD=>. The currency was hit after the country's central bank said in its quarterly monetary policy statement that a significant slowdown in demand would help curb inflation pressures. [ID:nSYD92347]
However analysts think that rates in Australia may still rise further as the slowdown may not be as significant as expected.
"Any evidence over the next three to six months that the Bank's required slowdown is not happening will soon lead to a very sharp change in the current soothing rhetoric and another rate hike will ensue," said Westpac in a note to clients.
Sterling was little changed, having fallen to a two-month low of $1.9497 <GBP=> earlier in the day, after the Bank of England kept interest rates on hold at 5 percent on Thursday. (Reporting by Simon Falush)
(Editing by Gerrard Raven) ((simon.falush@reuters.com. +44 20 7542 7681) Reuters Messaging: simon.falush.reuters.com@reuters.net))
Currency bid prices at 0808 GMT. All data taken from Reuters
with percent change calculated from the daily U.S.
close at 2130 GMT.
Last US Close % Chg YTD % 2007
08 May. Close
-----------------------------------------
Euro/dlr <EUR=> 1.5471 1.5406 +0.42 +6.05 1.4589
Dlr/yen <JPY=> 103.03 103.73 -0.67 -7.46 111.33
Euro/yen <EURJPY=> 159.41 159.69 -0.18 -1.92 162.53
Dlr/swiss <CHF=> 1.0425 1.0507 -0.78 -8.03 1.1335
Stg/dlr <GBP=> 1.9544 1.9548 -0.02 -1.53 1.9847
Dlr/cad <CAD=> 1.0105 1.0174 -0.68 +1.42 0.9964
Aus/dlr <AUD=> 0.9414 0.9440 -0.28 +7.50 0.8757
NZD/Dlr <NZD=> 0.7732 0.7720 +0.16 +0.86 0.7666
Euro/swiss <EURCHF=> 1.6131 1.6187 -0.35 -2.47 1.6539
Euro/stg <EURGBP=> 0.7915 0.7879 +0.46 +7.70 0.7349
Euro/sek <EURSEK=> 9.2920 9.2850 +0.08 -1.47 9.4304
Dlr/Nok <NOK=> 5.0830 5.1132 -0.59 -6.47 5.4347
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FOREX-Euro recovers vs dlr on Trichet inflation comments
Reuters: [2008-05-08 22:16:00]
(Recasts; updates prices, adds comment)
By Steven C. Johnson
NEW YORK, May 8 (Reuters) - The euro rebounded on Thursday from a two-month low against the dollar after European Central Bank President Jean-Claude Trichet said inflation remains his top concern, signaling the bank won't cut interest rates anytime soon.
After the ECB left the benchmark refinancing rate at 4 percent on Thursday, Trichet told reporters that high energy and food costs mean the euro zone still faces "a protracted period" of high inflation. For details, see [ID:nL08903738] [ID:nL09858908]
That helped lift the euro off a two-month trough below $1.53, pushing it as high as $1.5440 <EUR=>. It last changed hands at $1.5396, little changed from late Wednesday. Some investors had expected Trichet to temper his tough talk on inflation and focus on signs of slowing euro zone growth.
"Trichet failed to dampen his hawkish stance despite softening euro-zone growth and inflation data," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York. "The conclusion to be drawn is that the ECB is no closer to cutting rates today than it was last month."
The ECB's continued focus on inflation at a time when global growth appears to be slowing prompted investors to reduce exposure to risk, and that boosted the low-yielding yen that's typically used to finance risky trades.
The dollar eased 0.7 percent to 103.90 yen <JPY=> while the euro also shed 0.7 percent to trade at 159.97 yen <EURJPY=>.
"Concern has shifted away from liquidity and toward global growth, and I think the global economy is only now going to start feeling the effects of the U.S. flu," said Paresh Upadhyaya, who helps manage $50 billion in currency assets at Putnam Investments in Boston.
"That's one reason why it's very difficult to go long dollar-yen or dollar-Swiss franc because those two currencies will continue to benefit from flight-to-safety bids," he added.
The dollar fell 0.3 percent to 1.0520 Swiss francs <CHF=> on Thursday, while sterling was steady at $1.9530 <GBP=> after the Bank of England left interest rates on hold at 5 percent.
Economic data in Britain has reflected a weakening economy, with house prices sliding rapidly, and analysts said they expected the BoE to cut rates when it meets again in June.
ECB POLICY DILEMMA
The Federal Reserve has already cut rates to 2 percent from 5.25 percent over the past eight months, though U.S. central bank officials indicated last week that they may not need to cut again.
But the situation is different for the ECB, which faces rising food and energy prices on one hand and slowing growth on the other.
"They are in a very difficult situation, because if inflation remains sticky, they can't cut rates," said Putnam's Upadhyaya.
But on the other hand, he said continued weakness in euro zone data could keep pressure on the single currency, making any return to a record high above $1.60 unlikely.
In a volatile session, the euro was down prior to Trichet's press conference after the Financial Times said unidentified U.S. and European officials want the dollar to strengthen, though European Union officials played down the report.
In Brussels, a source linked to the Eurogroup of finance ministers said, "I am not aware of any high-level contacts taking place." (Additional reporting by Nick Olivari; Editing by Gary Crosse)
((steven.c.johnson@reuters.com; +1-646-223-6346; Reuters Messaging: steven.c.johnson.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com
* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: MARKETS FOREX
FOREX-Euro slides to 2-mth low vs dollar; Trichet eyed
Reuters: [2008-05-08 13:54:00]
(Changes byline, adds quotes, updates prices)
By Simon Falush
LONDON, May 8 (Reuters) - The euro hit a two-month low against the dollar on Thursday, hurt by a report that U.S. and European officials want the dollar to strengthen, while the European Central Bank kept rates steady at 4 percent.
Investors awaited comments from ECB President Jean-Claude Trichet at a post-decision news conference for clues on whether softer regional economic data will prompt less hawkish language, which would fuel more speculation of a rate cut in the future.
The yen jumped, pushing the dollar and euro more than one percent lower at one point as sagging stock markets encouraged the unwinding of carry trades.
The dollar hit a two-month high against a basket of major currencies after a Financial Times report said the United States and Europe now have a united desire to see the dollar strengthen against the euro, citing officials on both sides of the Atlantic [ID:nT351863].
The single currency has been on the back foot in recent weeks after hitting a record high of $1.6018 on April 22 as poor economic data has started to eat away at a perception of a resilient euro area economy and increased prospects of rate cuts to come.
The ECB faces a policy dilemma in the current climate of high food and oil prices and slowing growth as the currency zone is proving vulnerable to fallout from the ongoing global credit crisis.
Trichet has previously sounded a hawkish tone on monetary policy, stressing inflationary risks and any retreat from this stance will be taken as a sign that rates may be heading lower later this year.
"The market will wait to see if the ECB will be less hawkish than it has been," said Adarsh Sinha, currency strategist at Barclays Capital.
"The euro could be boosted if Trichet is not as dovish as people expect given the recent data as they try to gauge whether there will be rate cuts in the coming months."
The euro fell as low as $1.5287 <EUR=>, its lowest since March 11 and down 4.5 percent from April's record high, before recovering to $1.5362 by 1146 GMT. The dollar was up 0.1 percent against a basket of six major currencies at 73.605, having earlier hit a two-month high at 73.895 <.DXY>.
The yen meanwhile has staged a slight recovery as global equities fell following nervousness about the lingering impact of the credit crunch.
"The yen appreciated as equities sold off leading to an unwind in the carry trade as it is inversely correlated to the performance of stocks," Sinha said.
In the carry trade investors sell low-yielding currencies like the yen to fund purchases of higher yielding assets.
The dollar was down 0.3 percent at 104.32 yen having fallen as low as 103.68 yen earlier in the session <JPY=>.
RATES STEADY
A sharp drop in euro zone retail sales and weaker than expected manufacturing data on Wednesday combined to raise worries about the region's economic outlook further and revived expectations for eventual rate cuts though the ECB held rates steady at 4 percent.
Economic data in Britain has reflected a sharply slowing economy, with house prices slipping rapidly.
While UK rates were held steady at 5 percent, but the pound erased brief gains <GBP=> after the decision as rates are seen as falling soon with 40 of 65 predicting a cut will come in June [BOE/INT].
"The BoE rate cutting cycle is not over with the next cut likely in June," said BBH in a note to clients. "The focus will be on the minutes (released on May 21) where at least one or two doves will likely have voted for a cut."
Elsewhere, the New Zealand dollar slid more than 1 percent versus the U.S. dollar <NZD=> after data showing the country's biggest quarterly employment drop in 20 years stoked expectations for its central bank to start cutting rates later in the year. [nWEL1952]
(Editing by David Christian-Edwards) ((simon.falush@reuters.com. +44 20 7542 7681) Reuters Messaging: simon.falush.reuters.com@reuters.net))
Keywords: MARKETS FOREX
Currency bid prices at 1150 GMT. All data taken from Reuters
with percent change calculated from the daily U.S. close at 2130
GMT.
Last US Close % Chg YTD % 2007
07 May. Close
-----------------------------------------
Euro/dlr <EUR=> 1.5359 1.5390 -0.20 +5.28 1.4589
Dlr/yen <JPY=> 104.26 104.65 -0.37 -6.35 111.33
Euro/yen <EURJPY=> 160.17 161.06 -0.55 -1.45 162.53
Dlr/swiss <CHF=> 1.0553 1.0548 +0.05 -6.90 1.1335
Stg/dlr <GBP=> 1.9565 1.9536 +0.15 -1.42 1.9847
Dlr/cad <CAD=> 1.0106 1.0095 +0.11 +1.43 0.9964
Aus/dlr <AUD=> 0.9422 0.9411 +0.12 +7.59 0.8757
NZD/Dlr <NZD=> 0.7724 0.7815 -1.16 +0.76 0.7666
Euro/swiss <EURCHF=> 1.6214 1.6238 -0.15 -1.97 1.6539
Euro/stg <EURGBP=> 0.7850 0.7877 -0.34 +6.82 0.7349
Euro/sek <EURSEK=> 9.3001 9.3102 -0.11 -1.38 9.4304
Dlr/Nok <NOK=> 5.1258 5.1209 +0.10 -5.68 5.4347
Latest forex developments <FXNEWS>
All forex news ... [FRX] Debt...[DBT] Indicators...[ECI]
Currency reports.. [USD/] [DLR/BLOC]
[GBP/] [AUD/] [NZD/] [CAD/]
All spots <FX=>
Tokyo spots <AFX=>
Europe spots <EFX=>
Volatilities <FXVOL>
Tokyo Forex market info from BOJ <TKYFX>
World central bank news [CEN]
Economic Forecasts...<ECON> Official rates...[INT/RATE]
Forex Diary.......[MI/DIARY] Top events........[M/DIARY]
Diaries...........[DIARY] Diaries Index........[IND/DIARY]
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FOREX-Euro hits 2-mth low vs dollar; ECB, Trichet eyed
Reuters: [2008-05-08 10:41:00]
(Changes dateline, byline, adds quotes, updates prices)
By Veronica Brown
LONDON, May 8 (Reuters) - The euro hit a two-month low against the dollar on Thursday, hurt by a report that U.S. and European officials want the dollar to strengthen, as markets awaited a European Central Bank rate decision and statement.
The yen jumped, pushing the dollar and the euro more than one percent lower as sagging stock markets encouraged the unwinding of carry trades.
The dollar hit a two-month high against a basket of major currencies as a Financial Times report said the United States and Europe now have a united desire to see the dollar strengthen against the euro, citing officials on both sides of the Atlantic [nT351863].
The single currency has been on the back foot in recent weeks after hitting a record high of $1.6018 on April 22 as poor economic data has started to eat away at a perception of a resilient euro area economy.
Mitul Kotecha, head of global foreign exchange research at Calyon, said the FT report had placed limits on the dollar's weakness.
"I think the big surprise in the story is that we know that European officials are happy with a firmer dollar but the fact that there is explicit comment saying U.S. officials are happy with the dollar's rebound is perhaps the reason markets have reacted as much," he said.
"Until now it seems to be an open door policy for dollar weakness but clearly there are limits," he added.
The ECB faces a policy poser in the current climate of sky-high food and oil prices and slowing growth as the currency zone is proving vulnerable to fallout from the ongoing global credit crisis.
With this in mind, even though interest rates are expected to be left on hold at 4 percent after the ECB meets later on Thursday, markets will be scrutinising every word from ECB president Jean-Claude Trichet's post-decision news briefing at 1230 GMT.
"Trichet will still need to strike a hawkish tone. Nevertheless the central bank will not want to be perceived as neglecting growth and we expect Trichet will also place a far greater emphasis on downside risks to the economy," UBS strategists said in a note to clients.
The euro fell to $1.5287 <EUR=>, its lowest since March 11 and down 4.5 percent from April's record high. The dollar was up 0.18 percent against a basket of six major currencies at 73.658, having earlier hit a two-month high at 73.895 <.DXY>.
The yen rose broadly as stock markets fell, with the euro falling 1.17 percent to 159.19 yen <EURJPY=>, while the dollar lost around 1 percent, before trimming losses to stand at 103.85 yen, down 0.7 percent <JPY=>.
RATE FOCUS
A sharp drop in euro zone retail sales and weaker than expected manufacturing data on Wednesday combined to raise worries about the region's economic outlook further and revived expectations for eventual rate cuts.
While the ECB was widely seen standing pat, dealers said calls from a minority of analysts for a rate cut in Britain from the Bank of England on Thursday were growing.
Economic data in Britain has reflected a sharply slowing economy, with house prices slipping rapidly.
Most economists polled by Reuters expect interest rates to stay on hold at 5 percent after the BoE's policy meeting at 1100 GMT, while 40 of 65 predict a cut will come in June [BOE/INT]. However a surprise cut on Thursday can't be ruled out.
"The timing of the move seems to be the issue here. We're looking for no change, but it seems that there is a growing minority expecting a cut today," Calyon's Kotecha said.
Elsewhere, the New Zealand dollar slid more than 1 percent versus the U.S. dollar <NZD=> after data showing the country's biggest quarterly employment drop in 20 years stoked expectations for its central bank to start cutting rates later in the year. [nWEL1952]
(Reporting by Veronica Brown; Editing by Gerrard Raven)
((RM:veronica.brown.reuters.com@reuters.net; Tel: +44 207 542 6745))
Keywords: MARKETS FOREX
Currency bid prices at 0829 GMT. All data taken from Reuters
with percent change calculated from the daily U.S.
close at 2130 GMT.
Last US Close % Chg YTD % 2007
07 May. Close
-----------------------------------------
Euro/dlr <EUR=> 1.5333 1.5390 -0.37 +5.10 1.4589
Dlr/yen <JPY=> 103.88 104.65 -0.74 -6.69 111.33
Euro/yen <EURJPY=> 159.33 161.06 -1.07 -1.97 162.53
Dlr/swiss <CHF=> 1.0554 1.0548 +0.06 -6.89 1.1335
Stg/dlr <GBP=> 1.9544 1.9536 +0.04 -1.53 1.9847
Dlr/cad <CAD=> 1.0089 1.0095 -0.06 +1.25 0.9964
Aus/dlr <AUD=> 0.9391 0.9411 -0.21 +7.24 0.8757
NZD/Dlr <NZD=> 0.7712 0.7815 -1.32 +0.60 0.7666
Euro/swiss <EURCHF=> 1.6185 1.6238 -0.33 -2.14 1.6539
Euro/stg <EURGBP=> 0.7845 0.7877 -0.41 +6.74 0.7349
Euro/sek <EURSEK=> 9.3048 9.3102 -0.06 -1.33 9.4304
Dlr/Nok <NOK=> 5.1395 5.1209 +0.36 -5.43 5.4347
Latest forex developments <FXNEWS>
All forex news ... [FRX] Debt...[DBT] Indicators...[ECI]
Currency reports.. [USD/] [DLR/BLOC]
[GBP/] [AUD/] [NZD/] [CAD/]
All spots <FX=>
Tokyo spots <AFX=>
Europe spots <EFX=>
Volatilities <FXVOL>
Tokyo Forex market info from BOJ <TKYFX>
World central bank news [CEN]
Economic Forecasts...<ECON> Official rates...[INT/RATE]
Forex Diary.......[MI/DIARY] Top events........[M/DIARY]
Diaries...........[DIARY] Diaries Index........[IND/DIARY]
Press Digests....[PRESS] Polls on G7 economies..[SURVEY/]
Next: Euro extends losses vs dollar, hits 2-month low