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Dollar dips from 1-month high vs yen after weak US data

Fri, Jul 25 2008, 03:39 GMT
http://www.afxnews.com

TOKYO, July 25 (Reuters) - The dollar dropped against the yen on Friday, extending falls from a one-month high hit the previous day on disappointing news on the U.S. housing sector and steep losses on Wall Street.

U.S. jobless claims have jumped and the pace of existing home sales has tumbled to a 10-year low, data showed on Thursday, reminding investors of the problems plaguing the world's largest economy.

But the euro struggled to gain against the dollar and dropped versus the yen as soft economic data from the euro-zone on Thursday cooled expectations for higher interest rates, reducing the relative yield appeal of the currency.

"The weakness in the U.S. housing sector is the root of concerns for bank problems and the economy there," said a trader at a Japanese trust bank.

"Though the weak data was not something new, it cooled sentiment for players who had bought the dollar in recent sessions," the trader said.

The dollar fell 0.2 percent against the yen <JPY=> from late U.S. trade on Thursday to 107.12 yen, dropping further from a one-month high of 107.99 yen hit the previous day.

Traders said the dollar was pressured on caution before more U.S. data later in the day that is expected to be weak, including new home sales and durable goods orders for June.

The euro was nearly flat versus the dollar at $1.5680 <EUR=>, but fell 0.2 percent against the yen to 167.88 yen, retreating further from an all-time high of 169.97 yen hit earlier this week.

The Munich-based Ifo economic research institute said German corporate sentiment in July suffered its biggest fall since 2001 and hit the lowest level since September 2005.

The New Zealand dollar fell after a surprise interest rate cut from the Reserve Bank of New Zealand, and other higher-yielding currencies extended falls on the view that U.S. economic woes are spreading to other parts of the world.

"There are no major currencies attractive enough to draw aggressive buying now," said a trader at a major Japanese bank.

The Australian dollar fell on concerns about the impact of the credit crisis on the nation's top lender.

National Australia Bank Ltd said on Friday it had raised provisions for its exposure to collateralised debt obligations (CDOs) by a further A$830 million ($798 million).

The Australian dollar slid 0.3 percent to $0.9556 <AUD=D4> and the kiwi fell 0.2 percent to $0.7414 <NZD=D4>.

Against the yen, the Aussie and the kiwi tumbled 0.5 percent to 102.40 yen <AUDJPY=R> and 79.40 yen <NZDJPY=R> respectively.

Japan's annual core inflation climbed to a fresh decade-high of 1.9 percent in June, data showed on Friday.

But the market was unmoved because the data matched economists' forecasts and did not alter expectations that the Bank of Japan will hold interest rates steady for a while.

(Editing by Hugh Lawson)

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

FOREX-Dollar steadies vs yen after fall on US data

Fri, Jul 25 2008, 01:10 GMT
http://www.afxnews.com

TOKYO, July 25 (Reuters) - The dollar steadied against the yen on Friday after falling the previous day on disappointing news on the U.S. housing sector and steep losses on Wall Street.

U.S. jobless claims have jumped and the pace of existing home sales has tumbled to a 10-year low, data showed on Thursday, underscoring the view that the world's largest economy is still struggling. [ID:nN24267606]

Japan's annual core inflation climbed to a fresh decade-high of 1.9 percent in June, data showed on Friday, but that matched economists' forecasts and did not alter expectations that the Bank of Japan will hold interest rates steady for a while. [ID:nT338873]

"The weakness in the U.S. housing sector is the root of concerns for bank problems and the economy there," said a trader at a Japanese trust bank.

"Though the weak data was not something new, it cooled sentiment for players who had bought the dollar in recent sessions," the trader said.

The dollar was little changed against the yen from late U.S. trade on Thursday at 107.32 yen <JPY=>, having fallen from a one-month high of 107.99 yen hit the previous day.

But traders said the dollar may be pressured on caution before more U.S. data later in the day that is expected to be weak, including new home sales and durable goods orders for June. The performance of Asian stock markets was also a focus after U.S. stocks tumbled on drops in financial shares.

The Australian dollar fell against the U.S. unit on concerns about the impact of the credit crisis on the nation's top lender. National Australia Bank Ltd <NAB.AX> said on Friday it had raised provisions for its exposure to collateralised debt obligations (CDOs) by a further A$830 million ($798 million). [ID:nSYU004799]

The Aussie slid 0.3 percent to $0.9560 <AUD=D4>.

The euro was also steady at $1.5685 <EUR=> as soft economic data from euro-zone on Thursday cooled expectations for higher interest rates and capped gains in the currency.

The euro barely budged against the yen at 168.20 yen <EURJPY=R> after falling further from an all-time high of 169.97 yen hit earlier this week.

The Munich-based Ifo economic research institute said German corporate sentiment in July suffered its biggest fall since 2001 and hit the lowest level since September 2005. (Editing by Hugh Lawson)

FOREX-Dollar near one-month high vs yen, kiwi slides

Thu, Jul 24 2008, 06:00 GMT
http://www.afxnews.com

TOKYO, July 24 (Reuters) - The dollar hovered near a one-month high against the yen on Thursday, supported by the previous day's drop in oil prices and signs of improved confidence in the U.S. financial sector.

Oil extended its losses on Wednesday to fall more than $20 from the all-time peak above $147 a barrel hit on July 11, while U.S. financial shares rose after President George W. Bush dropped a threat to veto a housing rescue bill.

The dollar was also supported due to comments this week by Philadelphia Federal Reserve President Charles Plosser, who said on Tuesday that the U.S. central bank may have to raise interest rates sooner rather than later to combat inflation.

"Overall, market sentiment is tilted towards dollar buying," said Hiroshi Yoshida, a currency trader at Shinkin Central Bank.

The dollar edged up to hit a fresh one-month high of 107.99 yen on trading platform EBS earlier on Thursday.

But it slipped back to 107.83 yen <JPY=> for a decline of 0.1 percent from late Wednesday U.S. trade, nudged lower due to selling by Japanese exporters.

The euro edged up 0.1 percent to $1.5700 <EUR=>, having retreated from a record high of $1.6040 hit on EBS last week.

Against the yen, the single European currency was little changed at 169.31 yen <EURJPY=R>, but still hovered within sight of an all-time peak of 169.97 yen struck on EBS on Wednesday.

The dollar was benefiting from the rapid fall in oil prices and the rebound in U.S. equities, which have received a lift after a series of U.S. bank earnings released last week contained no startlingly negative surprises, traders said.

"I think such moves were mainly caused by position unwinding," said a trader for a European bank.

"I have to wonder why people can be so optimistic, but I guess it's just a reflection of how negative they had been before," the trader said, alluding to the moves in the dollar and U.S. share prices.

The high-yielding New Zealand dollar fell sharply after the country's central bank cut interest rates for the first time in five years.

The Reserve Bank of New Zealand cut its cash rate by a quarter percentage point to 8 percent and said further reductions were likely to counter a rapidly slowing economy. [ID:nWEL287981]

The New Zealand dollar slid around 0.4 percent after the rate decision to $0.7416 <NZD=D4>.

MORE UPSIDE?

The dollar's break above its 200-day moving average against the yen earlier in the week and the fact that the dollar managed to hold above it on Wednesday was a supportive factor, said Shinkin Central Bank's Yoshida.

If the dollar manages to break above a peak hit in mid-June of 108.59 yen on trading platform EBS, it could next take a stab at 110.00 yen, traders said.

But for now, Japanese exporters seem intent on selling the dollar at levels above 108.00 yen and that seemed likely to at least slow the dollar's advance, they said.

A focal point later in the day will be the German Ifo business sentiment index for July.

The dollar could rise against the euro if the Ifo data comes in weak and that could help push the dollar higher against the yen as well, traders said. The mid-range forecast of 55 economists polled by Reuters was for the Ifo economic institute's business climate index to fall to 100.0 in July from 101.3 in June <ECONDE>.

A fall in July would follow on from a deterioration in morale in June to its lowest level since December 2005 and signal a sharp slowdown in Europe's largest economy after a strong start to the year. [ID:nL18891482]

Though a weak German Ifo would signal that the eurozone is slowing down, market watchers are also keeping a eye on this week's U.S. indicators.

Weak readings in existing U.S. home sales due later in the day and new housing starts to be released on Friday could present Europe in a better light, analysts said.

(Additional reporting by Shinji Kitamura and Shinichi Saoshiro; Editing by Michael Watson)

Keywords: MARKETS FOREX All data taken from Reuters calculated from the levels at 2130 GMT in the previous New York session.

Fed's Beige Book says pace of economic activity slowed since last report

Wed, Jul 23 2008, 18:12 GMT
http://www.afxnews.com

WASHINGTON (Thomson Financial) - Economic activity across the US has continued to erode over the last few months in the face of slower consumer spending, higher prices, reduced manufacturing activity and ongoing weakness in the housing market, the Federal Reserve said in its latest survey of economic conditions in the 12 Federal Reserve districts.

"Reports from the twelve Federal Reserve Districts suggests that the pace of economic activity has slowed somewhat since the last report," the Fed's Beige Book said today.

The Beige Book said that while the Cleveland and Minneapolis districts reported "slight increases in economic activity," and that the St. Louis district reported "stable" activity, most of the others noted either no growth, or a weakening or sluggish growth.

Dampened consumer spending appeared to be a big reason for the downturn.

"Consumer spending was reported as mixed, weak, or slowing in nearly all Districts since the last report," the Beige Book said, although it noted that the tax rebate checks issued over the summer "boosted sales for some items, especially electronics."

The report said that while discount store sales were on the rise in six of the districts, sales at other stores were "typically characterized as weak or falling."

Auto sales were also "almost uniformly weak across Districts," the Beige Book said. However, demand for fuel-efficient cars was seen as increasing in five districts, and the Dallas district noted that "consumers were paying sticker prices for such vehicles."

Higher prices for oil and gas are a big cause of the switch to smaller, more fuel-efficient cars, and the Beige Book noted that this, along with rising prices for food, metals and chemicals, led all districts to report "elevated or increasing" price pressures.

These price hikes are creating a squeeze for manufacturers, who are reluctant to pass them onto consumers at a time when the economy is slowing.

"Several firms in the Philadelphia District indicated that sluggish demand has made it difficult to raise prices, and Atlanta District businesses were hesitant to pass through increases due to a reduction in discretionary consumer spending."

The report said manufacturing activity "remained weak" in most districts, although Cleveland, St. Louis and San Francisco reported "stable or slightly increasing activity." A decline in auto manufacturing was reported in four districts, although St. Louis reported a "slight rise" in demand for small and hybrid auto parts.

Despite the manufacturing downturn, four districts reported "continued high demand for exports," and rising energy prices led to increased demand for energy equipment in several districts.

The market for residential real estate remained weak "across most of the country," as slower or sluggish home sales were reported in most districts. Most districts also reported falling prices and rising inventories, although Dallas reported that its inventories were declining while prices were rising, and the Kansas City district reported little change.

Commercial real estate was also weak or sluggish in most districts, although Cleveland, Minneapolis and Kansas City noted "some improvement."

On a related issue, the Beige Book reported "restrained" loan growth across the country, due reduced residential lending.

"Most Districts reported a further tightening of credit standards, especially for residential real estate and construction loans," it said.

pete.kasperowicz@thomsonreuters.com

pik/wash/rw

FOREX-Dollar holds ground after rally, Aussie rise fizzles

Wed, Jul 23 2008, 04:16 GMT
http://www.afxnews.com

TOKYO, July 23 (Reuters) - The dollar stayed firm on Wednesday, holding much of the ground gained against the euro and yen the previous day on a verbal lift from top U.S. officials and a sharp $4 slide in the price of crude oil.

The dollar made little further headway, however, as sellers emerged to take advantage of Tuesday's surge, in which the greenback jumped 0.7 percent against the yen <JPY=> and 0.9 percent versus the euro <EUR=>.

On Tuesday, Philadelphia Federal Reserve President Charles Plosser said rising inflation could force the Fed to start raising rates, giving a big lift to the dollar. [ID:nN22196417]

The dollar received more support when U.S. Treasury Secretary Hank Paulson said a strong dollar is "really very important".

"The dollar broke through some key levels and has upside momentum," said Motonari Ogawa, director of forex trading at Barclays Bank in Tokyo.

"But Japanese exporter selling could emerge at these levels, and it won't be a one-way rise for the dollar," said Ogawa.

The dollar was up 0.1 percent at 107.32 yen <JPY=>. After Tuesday's jump, the dollar finished above the 200-day moving average against the yen for the first time in a year, which analysts consider a strong positive technical signal.

The euro was little changed at $1.5786 <EUR=> and down 0.1 percent against the yen at 169.23 <EURJPY=R>, still not far from a record high of 169.91 yen hit on Monday.

Traders were wary of pushing the dollar too high ahead of U.S. housing-related data later in the week, fearing that long positions on the greenback would be at risk should the numbers disappoint and thus knock the wind out of U.S. stocks.

Figures for U.S. existing home sales will be released on Thursday and new home sales data will be out on Friday.

Also of interest among market watchers is whether Plosser's hawkish stance on monetary policy is an isolated one, or if it will resonate with other Fed Board members.

Fed documents released on Tuesday showed that Kansas City Fed President Thomas Hoenig and Dallas Fed President Richard Fisher sought a quarter percentage point rate hike in June to stem inflation.

In particular, Fed Board member Frederic Mishkin and Vice Chairman Donald Kohn's appearance at a Bank of Canada economic conference in Ottawa later on Wednesday is being carefully watched.

"Though inflation is a shared concern, Plosser, a known hawk, is still in the minority among his peers as others want to see the credit crisis resolved first, and raising rates is not viable under such a priority," said Masafumi Yamamoto, head of forex strategy for Japan at Royal Bank of Scotland.

Kohn may present a more balanced monetary policy view today and could push the dollar down, given that the fraility of the economy and the financial sector remain key U.S. themes, Yamamoto said.

The Australian dollar rose briefly against the U.S. dollar as numbers released on Wednesday showed core inflation in Australia accelerating to its fastest annual pace in almost 17 years during the second quarter.

CPI rose 1.5 percent from the previous quarter and 4.5 percent year-on-year, but both numbers were as expected by the Reserve Bank of Australia and did not add to expectations of yet another rate hike, analysts said.

The Aussie briefly hit $0.9736 <AUD=D4> on the Reuters trading system but eased back to $0.9706, down 0.1 percent.

(Editing by Edwina Gibbs)

FOREX-Dollar holds ground after rally

Wed, Jul 23 2008, 01:33 GMT
http://www.afxnews.com

On Tuesday, Philadelphia Federal Reserve President Charles Plosser said rising inflation could force the Fed to start raising rates, giving a big lift to the dollar. [ID:nN22196417]

The dollar received more support when U.S. Treasury Secretary Hank Paulson said a strong dollar is "really very important".

"The dollar broke through some key levels and has upside momentum," said Motonari Ogawa, director of forex trading at Barclays Bank in Tokyo.

"But Japanese exporter selling could emerge at these levels, and it won't be a one-way rise for the dollar," said Ogawa.

The dollar was up 0.1 percent at 107.32 yen <JPY=>.

The euro was little changed at $1.57832 <EUR=> and flat against the yen at 169.38 <EURJPY=R>, not far from a record high 169.91 yen hit on Monday.

Traders were also wary of pushing the dollar too high ahead of U.S. housing-related data later in the week, fearing that long positions on the greenback would be at risk should the numbers disappoint and thus knock the wind out of U.S. stocks.

On the immediate horizon for market participants is Australian second quarter CPI due at 0130 GMT.

CPI is expected to have risen 1.2 percent from the previous quarter and 4.3 percent year-on-year.

The Australian dollar was 0.1 percent higher at $0.9723 <AUD=D4>. (Editing by Michael Watson)

Forex - Dollar rangebound but financial worries continue to linger

Tue, Jul 22 2008, 08:39 GMT
http://www.afxnews.com

LONDON (Thomson Financial) - The dollar was steady against the euro, although it failed to claw back any of last night's losses as investors continued to fret about the U.S. financial sector.

The dollar fell Monday night after oil prices rebounded and American Express posted disappointing earnings, weighing on equity markets despite better than expected results from Bank of America. Earnings reports published so far by the major U.S. banks have mainly surprised on the upside, but analysts said investors remain wary that several major institutions are set to report major losses.

"There's an expectation that more bad news will follow as the regional banks report over the coming days," said Gary Thomson, head of sales trading at CMC Markets.

At 0819 GMT the euro was trading at $1.5935 having been at $1.5923 at 0200 GMT.

With no major European data scheduled for release this morning, analysts said major currencies are likely to remain rangebound and simply follow the fluctuation in commodity and equity markets.

"The difficulty is that there is little really for the markets to get their teeth into, and with no data of note out yesterday or today, this pattern may persist," said Daragh Maher, currency strategist at Calyon.

A speech later thought by Philadelphia Fed chief Charles Plosser may provide some direction, and European economic fundamentals may come to the fore later this week with the key German Ifo and euro zone PMI surveys scheduled for release.

Meanwhile the pound was firmer against the dollar, trading at $2.0037 compared to $2.0021 earlier this morning, ahead of outgoing Bank of England deputy governor John Gieve's appearance before the Treasury Select Committee.

Gieve, who has faced major criticism for his handling of the Northern Rock crisis, is due to give his views on Banking reform.

rachel.armstrong@thomsonreuters.com

rar/jfr

EUR/USD: The Euro on the upside

Tue, Jul 22 2008, 07:55 GMT
http://www.fxstreet.com

FXstreet.com (Barcelona) - The Euro has set a bottom, according to Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, and a retest of the all time high could be ahead: “Basing against 1.5800 and closing above 1.5900 yesterday might add some much-needed bullish momentum for a re-test of 1.6020/1.6040 all-time high.”

Concerning strategy, Elliott advices: “Attempt small longs on a dip to 1.5900, adding to 1.5835; stop below 1.5750. Cover longs between 1.5950 and 1.6020, re-buying on a weekly close above 1.6025 or a sustained break above 1.6050 for 1.6100 and then 1.6250.”

FOREX-Dollar drifts lower amid jitters about US bank results

Mon, Jul 21 2008, 04:20 GMT
http://www.afxnews.com

SYDNEY, July 21 (Reuters) - The U.S. dollar drifted lower on Monday after a firm opening, weighed down by lingering worries about the health of the U.S. financial sector ahead of earnings reports from regional banks this week.

The dollar inched down against a basket of currencies to 72.10 <.DXY> from Friday's levels. The euro rose almost a fifth of a percent against the U.S. currency to $1.5870 <EUR=> from late New York trade on Friday.

Last week, the dollar managed its biggest weekly gain against the euro in a month, buoyed by results from Citi <C.N>, JPMorgan Chase <JPMorgan> and Wells Fargo <WFC.N>, which beat low expectations and sparked a rally in financial stocks.

The KRW index, which measures the broader U.S. banking sector, ended the week with a 35 percent gain from a trough hit on Tuesday.

That bounce lessened the need for safe havens, lifting U.S. 10-year Treasury yields over 30 basis points last week to 4.09 percent. That proved attractive for carry trades, with investors borrowing yen at low rates to buy higher yielding currencies.

The U.S. currency was traded at 106.73 yen <JPY=>, down a fifth of a percent from late New York trade. Meanwhile, the Australian dollar climbed to an eight-month peak at 104.04 yen <AUDJPY=R>. Likewise, the euro was near all-time highs at 169.40 <EURJPY=R>.

Still, markets remain cautious ahead of a raft of regional bank earnings this week as investors fear more write-offs that could threaten the stability of some and perhaps cause a repeat of Indy Mac's <IMB.N> demise.

"Everyone (is) still focused on what happens to U.S. financial stocks," said Callum Henderson, chief currency strategist at Standard Chartered Bank.

He said some market chatter that central banks were trying to diversify their foreign exchange reserves out of the dollar weighed on sentiment towards the dollar.

Banks in the spotlight include Regions Financial Corp <RF.N>, Fifth Third Bancorp <FITB.O>, SunTrust Banks Inc <STI.N>, Wachovia <WB.N> and Washington Mutual <WM.N>>.

"JPMorgan and Citi might have done ok, but this week brings reports from WaMu and Wachovia, two institutions that have been singed by the subprime debacle," noted David Watt, a senior currency strategist at RBC Dominion Securities.

"Given that few of the major currencies seem attractive to investors at the present time, a sad-sack performance is appropriate," he added, noting that the euro and sterling had economic troubles of their own.

Indeed, the pound came under early pressure after Bank of England policy-maker David Blanchflower warned the British economy is heading into recession and interest rates should fall to "well below" their current 5 percent.

Blanchflower was the lone voice calling for a cut in rates at the central bank's May and June meetings. Sterling eased to $1.9950 <GBP=>, from $1.9973 late on Friday.

The dollar had also been supported last week by a sharp pullback in oil prices, which were down $18 from their highs at one stage.

Yet, oil prices <CLc1> gained 70 cents to $129.57 a barrel on Monday after talks over Iran's nuclear ambitions failed to reach a conclusion.

UBS strategist Geoffrey Yu said he believed the dollar's weakness will persist as equities remain trapped in a bear market while recent media reports said major sovereign wealth funds have cut their dollar exposures.

UBS expects the euro to rise to $1.6 in one month, reflecting concerns about the U.S. financial industry and elevated eurozone inflation risks before rebounding to $1.53 over three months, as the impact of oil prices on inflation moderates.

Looking ahead, traders were awaiting a speech from Philadelphia Fed chief Charles Plosser on Tuesday, while New York Fed President Timothy Geithner and SEC Chairman Christopher Cox are set to testify before a House Financial Services Committee hearing on regulation on Thursday.

The Fed releases its Beige Book summary of the economy on Wednesday where it will have to balance weakness in the housing market and the squeeze in credit markets against rising inflation.

Key U.S. data includes June existing home sales on Thursday and new home sales on Friday.

Forex - Dollar little changed vs. major currencies, Japan on holiday

Mon, Jul 21 2008, 00:14 GMT
http://www.afxnews.com

SYDNEY (Thomson Financial) - The U.S. dollar was trading little changed against rival currencies on Monday, consolidating

Friday's gains on a hawkish turn in expectations about Federal Reserve monetary policy after a rally in the U.S. financial sector and bullish comments by Minneapolis Fed President Gary Stern.

The more hawkish view was helped by a smaller-than-expected quarterly loss by Citigroup though such views will tested this week by a raft of U.S. data, starting with June leading indicators tonight.

At 0000 GMT the dollar was at 106.94 yen from 106.95 yen late in New York on Friday while the euro was at $1.5841 from A$1.5845.

Trading was subdued because of a public holiday in Japan.

John Noonan, a senior foreign exchange analyst at Thomson Reuters IFR Markets, said if the improving conditions for the U.S. dollar continue this week, then the greenback could move up quite strongly.

He said there was a dramatic change of mood in the financial markets between Tuesday and Friday. "On Tuesday fear of systemic risk in the U.S. banking/financial sector was raging and U.S. banking and financial shares were under extreme pressure," said Noonan.

"This was seen as paralyzing the Fed and putting a lot of pressure on the U.S. dollar." Noonan said by the end of the week the financial waters had calmed significantly after the better-than-expected results from Citigroup as well as Wells Fargo and JP Morgan Chase.

By Friday the Fed Fund Futures were pricing in a 76 percent chance of a 25 basis point hike by the end of 2008. "It is a bit surprising then, that the euro/dollar isn't lower," Noonan said.

Sydney 10:00 a.m. (0000 GMT)

U.S. dollar

yen 106.94

Swiss franc 1.0227

Euro

U.S. dollar 1.5841

yen 169.375

Swiss franc 1.6197

pound 0.7946

Pound

U.S. dollar 1.9937

yen 213.169

Swiss franc 2.0378

Australian dollar

U.S. dollar 0.9723

pound 0.4876

yen 103.965

New Zealand dollar

U.S. dollar 0.7598

bruce.hextall@thomsonreuters.com

bhx/ms