Thursday, September 03, 2009

KARACHI: The rupee retained its firmness against dollar on the currency market on Wednesday, dealers said. On the interbank market the rupee extended its gains, rising 22 paisa versus dollar for buying at 82.70 and rose by 23 paisa for selling at 82.75, dealers said. In the third Asian trading session yen retreated from a seven-week high against dollar and euro, pushed back after economic growth in Australia supported the case for an early rise in rates and powered the Australian dollar higher.

Most regional shares fell as concerns about the financial sector outweighed data showing growth in the US manufacturing sector and dragged Wall Street down, sending the low-yielding yen up against riskier currencies initially.

OPEN MARKET RATES: The rupee managed to gain 30 paisa against dollar for buying and selling at 82.70 and 82.80, dealers said. The rupee also picked up 20 paisa versus euro for buying and selling at Rs 117.15 and Rs 117.65, they said.

Open Buying Rs 82.70

Open Selling Rs.82.80

Interbank Closing Rates: Interbank Closing Rates For Dollar On Wednesday

Buying Rs.82.70

Selling Rs.82.75

(BRecorder)

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Thursday, September 03, 2009

NEW YORK: The yen and dollar both rose on Tuesday as fears of further US bank failures overshadowed unexpectedly strong manufacturing data, boosting the two currencies' safe-haven appeal. On Wall Street, US stock indexes were all down around 2 percent at the close as investors fretted that chatter from hedge funds on a bank failure could prove accurate.

The decline came despite upbeat economic news from the United States and euro zone as well as a stabilisation in Chinese shares after a rout on Monday. The hedge fund talk "is a huge driver" of currency markets, said Dan Cook, senior market analyst at IG Markets Inc in Chicago. "When you have data like we had but the Dow drops, people are running for that safe haven." In late afternoon trading in New York the dollar index, which tracks a basket of six major currencies, was up 0.7 percent at 78.747, rebounding from a session low of 77.944, according to Reuters data.

The dollar was down 0.1 percent against the yen at 92.89 yen, above Monday's seven-week low of 92.53, according to Reuters data. But the yen was up 1 percent against the Canadian dollar, 0.7 percent against the Swiss franc, 0.9 percent against the euro and 0.8 percent against the pound. The euro was down 0.8 percent against the dollar at $1.4212, well below a session high of $1.4377.

The US manufacturing sector expanded in August for the first time in more than a year and a half. The Institute for Supply Management's index of national factory activity rose to 52.9 from 48.9 in July. Separate data showed pending sales of previously owned US homes raced to a two-year high in July, further evidence the housing market was on a steady recovery path.

"Clearly, the US data is surprising to the upside," said Jack Iles, senior portfolio manager who helps manage $2.5 billion assets at MFC Global Investment Management in Boston. But despite a batch of upbeat US economic numbers, major currencies remained in ranges as investors continued to debate about the outlook for the global economy, analysts said.

(Reuters)

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Tuesday, September 01, 2009

KARACHI: The rupee trimmed its loses against dollar on the currency market on Monday, experts said. On the interbank market the rupee gained 8 paisa versus the US currency for buying and selling at 83.02 and 83.07, dealers said.

In the First Asian trading yen rose to its highest in seven weeks against dollar, boosted by the end of election uncertainty following a thumping win for the opposition Democratic Party of Japan (DPJ) and then by dollar sell orders. The yen edged up after the landslide election victory on Sunday and then gathered pace as automatic dollar sell orders were triggered close to 93.00 yen per dollar, traders said.

OPEN MARKET RATES: The rupee inched up with a rise of five paisa in relation to dollar for buying and selling at 82.95 and 83.05 in process of trading, dealers said. The rupee also rose by 50 paisa in terms of euro for buying and selling at Rs 117.30 and Rs 117.80, they said.

Open Buying Rs 82.95

Open Selling Rs 83.05

Interbank Closing Rates: Interbank Closing Rates For Dollar On Monday.

Buying Rs.83.02

Selling Rs.83.07

(BRecorder)

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Friday, August 28, 2009

LONDON: The interbank cost of borrowing euros hit new lows on Thursday with liquidity still abundant, but data showed money was still not reaching the real economy and central bankers continued to warn of an uncertain outlook. Benchmark sterling and dollar rates also marked new lows, with the latter remaining below equivalent yen rates, a market anomaly seen this week for the first time in 16 years.

Despite around 160 billion euros of excess liquidity in the system, loans to eurozone households and businesses fell in July to record their slowest annual growth ever, the European Central Bank said on Thursday. "The key thing is that there is little sign that the ECB's liquidity provisions are encouraging banks to lend to the wider economy," said Ben May, an economist at Capital Economics.

Meanwhile, ECB Governing Council member Mario Draghi was the latest central banker to sound a cautionary note, saying the global financial and economic crisis is easing but the outlook remained uncertain. His comments echo those of other policymakers in recent days, which have supported government bonds and interest rate futures in the eurozone.

"There doesn't appear to be any final demand behind the positive indicators we're seeing, it's more an inventory cycle thing going on at the moment," said Nordea's chief analyst Niels From.

Benchmark three-month euro Libor rates were almost a basis point lower at 0.8025 percent, with the dollar equivalent just over a basis point lower at 0.36036 percent. The premium that dollar Libor trades over a risk-free benchmark, Overnight Index Swap rates - a gauge of stress in the banking sector - fell to 18 basis points, a level seen in August 2007 just as the credit crisis erupted.

(Reuters)

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Wednesday, August 26, 2009

KARACHI: First session of Ramazan commenced on the positive note on Tuesday as the rupee managed to gain sharply against dollar on the interbank market due to easy supply of the US currency, money experts said. The rupee gave up overnight weakness in relation to dollar, rising 27 paisa for buying and selling at 82.78 and 82.83, they said.

During the second Asian session yen headed higher as share markets fell and investor interest in higher-yielding currencies ebbed, while currencies took in their stride news that Federal Reserve chief Ben Bernanke would be re-appointed. A US administration official said President Barack Obama would reappoint Bernanke for a second term as Fed chairman.

OPEN MARKET RATES: The rupee recovered 10 paisa in terms of the US currency, rising 10 paisa for buying and selling at 82.80 and 82.90, dealers said. The rupee also picked up 15 paisa in relation to the euro for buying and selling at Rs 117.55 and Rs 118.05, they said.

Open Buying Rs 82.80 Open

Selling Rs 82.90

Interbank Closing Rates: Interbank Closing Rates For Dollar On Tuesday.

Buying Rs.82.78

Selling Rs.82.83

(BRecorder)

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Thursday July 16, 2009

KARACHI: The rupee gained sharply on the interbank market on Wednesday, it, however, crossed the barrier of 83 on the open market, analysts said. On the interbank market the rupee managed to gain 18 paisa against dollar for buying at 82.32 and 21 paisa for selling at 82.34, they said.

In the meantime, the rupee showed further decline, touching 83 low level in terms of the US currency, they said. Falling value of rupee on the open market is giving an impression that the rupee may lose further on the interbank market in the near future, they added. They said that slide in rupee's value is benefiting for the textile and rice exporters. It looks that the rupee may continue to fall this year also after an erosion of 30 percent value of the rupee during the last fiscal year, they added. In the third Asian trade yen maintained a soft tone, after falling the previous day when upbeat results from Goldman Sachs and Intel boosted investor risk appetite for stocks and modest hopes for an economic recovery. But some analysts said that the reaction from the currency and stock markets could have been stronger, underlining caution ahead of more earnings results and data.

Open Market Rates: The rupee lost 40 paisa versus dollar for buying at 82.70 and 30 paisa for selling at 83.00, dealers said. The rupee followed same pattern against euro losing 49 paisa for buying and selling at Rs 114.54 and Rs 115.54, they said.

Buying Rs 82.32
Selling Rs 82.34

Interbank Closing Rates: Interbank Closing Rates For Dollar On Wednesday.

Open Buying Rs 82.70
Open Selling Rs 83.00

(BRecorder)

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Wednesday July 15, 2009

KARACHI: Bears dominated on the currency market on Tuesday as the rupee continued downward drift against dollar on both the interbank and open market, analysts said. On the interbank market, the rupee tended lower versus dollar, shedding 10 paisa for buying and selling at 82.50 and 82.55, they added.

In the second Asian trade yen was steady against dollar and euro, recovering from earlier losses, as investors braced for earnings reports including one from Goldman Sachs as well as economic data in the United States. The yen initially slipped on hopes that US financial sector earnings would be better than previously thought but it climbed back as investors played it safe before the figures are announced amid persistent worries over the global economy.

Open Market Rates: The rupee held its overnight level against dollar for buying at 82.30 while it shed 10 paisa for selling at 82.70, dealers said. Meanwhile the rupee maintained its overnight level in relation to euro for buying and selling at Rs 114.05 and Rs 115.05, they said.

Buying Rs 82.50
Selling Rs 82.55

Interbank Closing Rates: Interbank Closing Rates For Dollar On Tuesday.

Open Buying Rs 82.30
Open Selling Rs.82.70

(BRecorder)

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Saturday July 11, 2009

KARACHI: The rupee has failed to come out of weak spells on rising demand by the importers, falling 25 paisa against dollar for buying and selling at 82.00 and 82.05, dealers said on the interbank market on Friday.

Increasing demand by importers, forced the rupee to come down versus dollar and it is most likely it may not be able to resist sharp losses for the near future, they said. In the final Asian session yen held steady, holding below the week's peaks with investors cautious as the US corporate earnings season gets under way, while euro lost ground against dollar and yen.

The yen hit a five-month high against dollar this week and surged to two-month highs against euro and Australian dollar as investors unwound bets in riskier assets that they made using the low-yielding Japanese currency.

Open Market Rates: The rupee drifted lower against the US currency, losing 20 paisa for buying at 82.00 and 25 paisa for selling at 82.30, dealers said. The rupee followed the same pattern in relation to euro, falling 46 paisa for buying and selling at Rs 112.84 and Rs 113.84, they said.

Buying Rs 82.00
Selling Rs 82.05

Interbank Closing Rates: Interbank Closing Rates For Dollar On Friday.

Open Buying Rs 82.00
Open Selling Rs 82.30

(BRecorder)

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Saturday July 11, 2009

LONDON: The dollar fell on Friday against the yen but rose against the euro as investors sought safe-haven currencies in the face of uncertain global recovery prospects and awaited quarterly company results. In afternoon London trade, the European single currency fell to 1.3927 dollars from 1.4024 dollars in New York late on Thursday. The dollar slid to 92.31 yen from 92.96 yen late Thursday. Many investors regard the dollar and yen as safe investments in times of economic uncertainty. The Japanese unit resumed its rally as investors digested disappointing news that the University of Michigan's US consumer confidence index plunged to 64.6 points this month from 70.8 in June, a far sharper fall than had been expected. "The clear winner has been the yen," said economist Derek Halpenny at The Bank of Tokyo-Mitsubishi UFJ in London. "It is the only major currency that has managed to advance against the dollar over the period since the equity markets in the US peaked on June 12. "Until sentiment shifts in the financial markets, the likelihood is that yen appreciation could persist." Added Lloyds TSB Corporate Markets analysts in a note: "The markets will also be watching the progression of the second-quarter US earnings season." Meanwhile the Group of Eight (G8) meeting in Italy drew to a close with little impact on foreign exchange market sentiment. Elsewhere, Japanese Economic and Fiscal Policy Minister Yoshimasa Hayashi said that the yen's rise posed a threat to Japanese exporters. "For this reason, we need to keep monitoring moves in the stock and currency markets closely," he told reporters. Markets are watching official Japanese comment carefully for any signs that Tokyo may be considering intervening in the market to curb the yen's rise, although analysts say it is unlikely to make a move at current levels. Traders were also pondering data showing that Japanese wholesale prices dropped by a record 6.6 percent in June from the previous year, deepening concerns that the economy is heading into another bout of deflation. In London trade on Friday, the euro was changing hands at 1.3927 dollars against 1.4024 dollars late on Thursday, 128.50 yen (130.42), 0.8605 pounds (0.8580) and 1.5124 Swiss francs (1.5120). The dollar stood at 92.31 yen (92.96) and 1.0862 Swiss francs (1.0779). The pound was at 1.6181 dollars (1.6341). On the London Bullion Market, the price of gold rose to 913 dollars an ounce at the fixing from 911.75 dollars an ounce late on Thursday. (AFP)

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Friday July 10, 2009

KARACHI: Bearish sentiment persisted on the interbank market on Thursday as the rupee fell five paisa more against dollar for buying and selling at 81.75 and 81.80, dealers said. Strong demand for dollars kept the rupee in drifting position and it appeared that if buying pressure continues, the rupee may touch the mark of 82, they said.

In the fourth Asian trade yen slid, falling from a five-month high against dollar and a two-month peak versus euro hit the previous day when doubts about the health of the global economy spurred risk aversion. The dollar and euro both fell more than two percent against yen on Wednesday, posting their sharpest one-day drops since March, according to data from trading platform EBS.

Open Market Rates: The rupee moved both ways versus dollar as it lost five paisa for buying at 81.80 while it gained the same amount for selling at 82.05, dealers said. The rupee maintained its surge versus euro rising 19 paisa for buying and selling at Rs 112.38 and Rs 113.38, they said.

Buying Rs 81.75
Selling Rs 81.80

Interbank Closing Rates: Interbank Closing Rates For Dollar On Thursday.

Open Buying Rs 81.80
Open Selling Rs 82.05

(BRecorder)

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Friday July 10, 2009

TOKYO: The yen fell slightly against the dollar in Asian trade Friday as investors regained some of their appetite for risk, reducing the appeal of the ‘safe-haven’ currency, dealers said. The dollar edged up to 93.02 yen in Tokyo morning trade from 92.96 in New York late Thursday. The euro eased to 1.3993 dollars from 1.4024 and to 130.16 yen from 130.42. The yen drifted lower as Japanese funds prepared to purchase risky higher-yielding currencies of emerging economies such as Brazil, Turkey and South Africa, Royal Bank of Scotland strategist Masafumi Yamamoto said. But the yen, which is seen as a safe haven during times of economic turmoil, could resume its rally if US consumer data or earnings reports due out later in the day disappoint markets, he told Dow Jones Newswires. If the University of Michigan consumer sentiment index shows a big fall, "that could lead to stock weakness and yen strength," Yamamoto said. On Wednesday the dollar fell to a near five-month low of 91.81 yen, adding to worries about the outlook for Japanese exports. Economic and Fiscal Policy Minister Yoshimasa Hayashi said that the yen's rise posed a threat to the fragile economy. "If the yen's rise and stock declines last a long time, there are concerns they may have a negative impact on both exporter and overall sentiment," he told reporters. "For this reason, we need to keep monitoring moves in the stock and currency markets closely," he added. Markets are watching Japanese officials' comments carefully for any signs that Tokyo may be considering intervening in the market to curb the yen's rise, although analysts say it is unlikely to make a move at current levels. The British pound gave back some of its sharp gains seen on Thursday, when a decision by the Bank of England not to expand its emergency asset purchase facility surprised markets. The pound fell to 1.6279 dollars from 1.6341. Traders were also digesting data showing that Japanese wholesale prices dropped by a record 6.6 percent in June from the previous year, deepening concerns that the economy is heading into another bout of deflation. (AFP)

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Wednesday July 08, 2009

TOKYO: The dollar was mixed in Asian trade Wednesday as fresh uncertainty over prospects for a US economic recovery and the outcome of a Group of Eight summit hung over the market. The dollar dropped to 94.56 yen in Tokyo morning trade from 94.81 in New York late Tuesday. The euro fell to 1.3885 dollars from 1.3926 and to 131.24 yen from 132.06. Traders were cautious ahead of the G8 summit that was due to start later Wednesday in Italy amid fresh jitters about the economic outlook. Japanese core machinery orders, a closely watched barometer of business investment, fell to their lowest level on record in May, data showed. Doubts over a US recovery resurfaced after a top White House economic advisor suggested that Washington may need a second stimulus package, NAB Capital strategist Spiros Papadopoulos wrote in a note. "The question is whether the US economy has reached a level of stabilisation yet, but the recent unemployment numbers tell me it hasn't," Laura Tyson, a member of President Barack Obama's Economic Advisory Panel, said in Singapore. US unemployment surged to a new 26-year high of 9.5 percent in June, government data showed last week. Traders were turning their attention to the G8 summit in Italy where leaders were expected to discuss efforts to tackle the global economic crisis. China had said last week that it wanted a broader global monetary system, sparking speculation that G8 leaders might discuss the dollar's status as an international reserve currency, potentially weighing on the greenback. "China fears its massive holdings of US debt ... are increasingly at risk alongside a falling dollar," said Papadopoulos. "But a quick glance at the agenda makes it pretty clear there will be little time for serious debate on the creation of a new global reserve currency," he added. Chinese President Hu Jintao cut short his trip to Italy to return to China because of unrest in the northwest Xinjiang region, leaving State Councillor Dai Bingguo to take part in the summit on his behalf. (AFP)

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Saturday July 04, 2009

KARACHI: Bearish sentiment was witnessed on the interbank market on Friday as the rupee shed two paisa against dollar for buying and selling at 81.52 and 81.57, dealers said. Persisting demand for dollars did not allow the rupee come out the weak spells in terms of the US currency, they said.

In the Asian final session euro struggled back from its lowest levels in a week, after a wave of sell orders compounded losses made on bleak US jobs numbers, and it found support as some investors judged it may have slipped too far. Dealers said euro hit stop-loss sell orders around $1.3980, and possible hedge fund selling, in the crossover between late US trade and the start of the Asian day, sending it down to $1.3927 on electronic trading platform EBS.

Open Market Rates: The rupee fell versus dollar dropping 15 paisa for buying at 81.40 and 20 paisa for selling at 81.60, dealers said. The rupee, however, gained 64 paisa versus euro for buying and selling at Rs 112.98 and Rs 113.98, they said.

Buying Rs 81.52
Selling Rs 81.57

Interbank Closing Rates: Interbank Closing Rates For Dollar On Friday.

Open Buying Rs 81.40
Open Selling Rs 81.60

(BRecorder)

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Saturday July 04, 2009

TOKYO: The euro struggled back from its lowest levels in a week on Friday, after a wave of sell orders compounded losses made on bleak US jobs numbers, and it found support as some investors judged it may have slipped too far. Dealers said the euro hit stop-loss sell orders around $1.3980, and possible hedge fund selling, in the crossover between late US trade and the start of the Asian day, sending it down to $1.3927 on electronic trading platform EBS.

The euro and currencies such as the Australian dollar, which have benefited from investor hopes for economic turnaround, had already weakened on Thursday after data showed US employers cut 467,000 jobs in June, far more than expected.

But analysts said market players then bought the euro back on Friday, helping it off the lows, although it was still weaker than before the employment data and investors were still dismayed the jobs numbers spelled a slower recovery than hoped.

The euro stood at $1.4002 on EBS, after shedding more than 1 percent on Thursday. It had hit a one-month high above $1.4200 earlier in the week. The euro dropped as far as 133.58 yen on Friday, extending a fall of nearly 2 percent on Thursday, but had edged back to 134.44 yen later in Asian trade.

It had also faced selling pressure after comments from European Central Bank President Jean-Claude Trichet the previous day that euro-zone activity would likely remain weak for the rest of the year. The ECB left its benchmark refinancing interest rate at a record low of 1 percent, as expected.

The dollar was steady against the yen at 96.00 yen, holding well within a range of 93.50-100 that has limited it since mid-April. With the jobs data out of the way, traders said focus was shifting to the Group of Eight meeting on July 8-10 and the US corporate earnings season that kicks off next week.

"Market players will watch China's comment on an alternative global currency. This is something that could take about 50 to 100 years, but the country's comment could still affect the market, even very briefly," said Tsutomu Soma, a senior manager in the foreign securities department at Okasan Securities.


(Reuters)

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Saturday July 04, 2009

LONDON: The dollar climbed against the euro Friday after eurozone retail figures slipped back into a rut and as fresh worries about the health of the US economy supported the ‘safe-haven’ greenback. In late afternoon trading here, the European single currency weakened to 1.3987 dollars from 1.3997 dollars in New York late on Thursday. Against the Japanese currency, the dollar also edged up to 96.00 yen from 95.94 yen on Thursday while the euro rose to 134.44 yen from 134.30 previously. Trading activity was limited however because US currency markets were closed for a public holiday ahead of the July 4 Independence Day celebrations. "The June US jobs report provoked disappointment and a subsequent sell-off in risk assets," said Mitul Kotecha, an analyst with French bank Calyon. referring to weaker-than-expected unemployment data released on Thursday. Investors bought the dollar after US job losses surged to 467,000 in June, lifting the unemployment rate to a 26-year high of 9.5 percent. The greenback is seen as a relatively safe bet in times of turmoil. The disappointing data suggest "unemployment will continue to rise, creating a mood of distrust over the green shoots of recovery," said Daisuke Uno, a market strategist at Sumitomo Mitsui Banking Corp. The jobs report, seen as one of the best indicators of economic momentum, was worse than market forecasts for 365,000 job losses in June. The previous month, the number of layoffs had fallen to 322,000. Adding to the disappointing economic outlook, official EU data showed retailers in the 16 nations using the euro saw their sales fall in May, renewing a slump that was broken in April by a short-lived improvement. The volume of retail sales in the eurozone dipped 0.4 percent in May over one month and 3.3 percent over one year, the Eurostat data agency said. The result wiped out a minor improvement booked in April when retail sales finally rose after months of steady decline, edging up 0.1 percent over one month and reducing the fall over one year to 2.5 percent. The retail report balanced out more optimistic figures from Europe last week that showed business and consumer confidence in the 16-member eurozone jumped to a six-month high in May while German unemployment declined. On Thursday, the European Central Bank kept its main interest rate steady at a record low of 1.0 percent as ECB chief Jean-Claude Trichet downplayed the threat of deflation in the eurozone in the face of a fall in prices. In trading here on Friday, the euro was changing hands at 1.3987 dollars against 1.3997 dollars late on Thursday, 134.44 yen (134.30), 0.8573 pounds (0.8538) and 1.5208 Swiss francs (1.5182). The dollar stood at 96.00 yen (95.94) and 1.0860 Swiss francs (1.0844). The pound was at 1.6336 dollars (1.6390). On the London Bullion Market, the price of gold rose to 932.50 dollars an ounce at the fixing from 929.50 dollars an ounce late on Thursday. (AFP)

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Friday July 03, 2009

KARACHI: The rates opened on bearish note on the interbank market on Thursday as the rupee lost 15 paisa against dollar for buying at 81.50 and 10 paisa for selling at 81.55, dealers said. The interbank market reopened after observing one-day holiday on account of bank closure, they said.

In the fourth Asian trading dollar edged up from close to three-week lows as the market awaited monthly jobs figures as a guide to recovery in the US economy but also kept a watchful eye on debate about reserve currencies.

Open Market Rates: The rupee retained its overnight level against dollar for buying at 81.25 while it shed 5 paisa for selling at 81.40, dealers said. The rupee fell in terms of euro losing 30 paisa for buying and selling at Rs 113.62 and Rs 114.62, they said.

Buying Rs 81.50
Selling Rs 81.55

Interbank Closing Rates: Interbank Closing Rates For Dollar On Thursday.

Open Buying Rs 81.25
Open Selling Rs 81.40

(BRecorder)

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Friday July 03, 2009

NEW YORK: Dollar borrowing costs between banks fell again on Thursday, hitting the latest in a series of all-time lows, but dismal US jobs data raised doubts over when the easy money would lift the economy. This took the shine off news that closely-watched London interbank offered rates for bank-to-bank lending fell to another record low. It also reminded analysts this had been achieved mainly by massive and continued Fed support.

"I do think overall it's a positive to have Libor coming down from the abnormally-distressed levels that we've seen over the last year, but I'm a little cautious because it is also a medicated market," said Jeff Given, a portfolio manager for fixed income with John Hancock Funds in Boston. Three-month dollar Libor fell to 0.5775 percent, a record low, from 0.5875 percent.

Driving the decline has been the Fed's zero-rate monetary policy and its myriad programs and facilities designed to pump money into a financial system that suffered its worst crisis since the Great Depression of the 1930s. A key gauge of risk aversion also reflected the continued normalisation of financial conditions. The TED spread remained pegged at levels that prevailed just before the start of the financial crisis nearly two years ago.


(Reuters)

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Friday July 03, 2009

NEW YORK: The US dollar dropped to its lowest in more than three weeks against the euro on Wednesday, pressured by news China has asked to debate proposals for a new global reserve currency at next week's Group of Eight summit. Gains in global stocks as well as improved manufacturing activity data in Europe and China have also hurt demand for the dollar as a safe haven.

But it was the report on China, citing sources that fuelled a steep round of dollar selling, adding to the currency's earlier losses in Asia and London. "This remains an Achilles' heel for the dollar and will be a problem going into the G8 meeting," said Richard Franulovich, senior currency strategist at Westpac in New York.

"I think this is making a mountain out of a molehill and I think China is playing games. The fear mow is that there could be a sharper G8 statement next week on this issue." In late afternoon trading, the euro was up 0.8 percent on the day at $1.4147. It earlier traded as high as $1.4201 in the wake of the China news, its highest since June 5, according to Reuters data.

The ICE Futures' dollar index, a measure of the greenback's value against a basket of six major currencies, fell 0.6 percent to 79.649. Other analysts were also skeptical about the China news. "We are struck by the gap between China's declaratory policy - what they say - and their operational policy - what they do," said Marc Chandler, head of global currency strategy at Brown Brothers Harriman in New York.

What China says sounds like they want to end the dollar's role as the top reserve currency, Chandler said, but the world's third-largest economy has not backed its rhetoric as it continues to accumulate dollars and Treasuries. China remains the biggest holder of US Treasuries with about $763.5 billion in holdings as of April, the latest data available from the US Treasury Department. It has roughly $2 trillion in currency reserves and some estimates from analysts suggested China holds about 65 percent to 75 percent of these in dollars.

Earlier in the session, positive data on manufacturing in Europe and China boosted economic optimism around the world. That helped US stocks and commodity currencies, such as the Canadian and Australian dollars.

That said, a round of mixed US data including readings on the labour, manufacturing and housing sectors, contributed to a bias toward dollar weakness as safe-haven support wanes, analysts said. But they warned that trading would remain volatile ahead of a key US employment report on Thursday. Economists expect the US economy to have shed another 363,000 jobs in June after losing 345,000 in May. The dollar rose 0.3 percent to 96.61 yen while the euro gained 1.1 percent to 136.71 yen.


(Reuters)

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Thursday July 02, 2009

LONDON: Sterling slid against the euro on Wednesday as worries persisted over the extent of the economic downturn in Britain, but gained against the dollar, which was broadly weaker ahead of key US employment data.

Worse-than-expected gross domestic product (GDP) figures on Tuesday showing the UK economy contracted by 2.4 percent in the first quarter continued to weigh on the pound, which reacted little to an above-forecast UK factory activity survey.

Sterling turned higher against the dollar as the US currency came under broad pressure, but it remained well below an 8-month high hit early on Tuesday after a surprisingly strong Nationwide UK housing survey.

Analysts expect trading to be cautious ahead of the non-farm payrolls data, which should provide fresh evidence on the health of the US economy. "The (PMI) numbers this morning were nothing too exciting for sterling. We're just teetering around and waiting for tomorrow's US payrolls numbers," said James Hughes, markets analyst at CMC Markets.

At 1433 GMT, the euro had climbed 0.4 percent against sterling at 85.55 pence. The pound rose 0.5 percent against the dollar to $1.6537, but stayed well below the 8-month high of $1.6745 hit on Tuesday. Sterling had spent most of the session trading lower against the dollar until figures showing US private employers cut more jobs than forecast pushed the US currency lower.

Sterling's trade-weighted index fell to 83.5, well below the 2009 high of 84.7 hit on Tuesday. Some analysts believe sterling could be set for some more gains near-term, however, particularly with UK equities performing strongly as the new quarter got underway, with the FTSE 100 index trading up 2 percent.

BNP Paribas currency strategist Ian Stannard said he viewed any falls in sterling against the dollar as a potential near-term buying opportunity. Further out, however, Stannard noted that sterling could be vulnerable to growing signs that investors may have been over-optimistic in their forecasts for a UK recovery.

Sterling gained around 15 percent against the dollar during the second quarter to post its best quarterly performance since late 1987. British manufacturing activity fell at its slowest pace in more than a year in June, with the latest CIPS/Markit manufacturing PMI index rising to 47.0 from 45.4 in May, the highest since May 2008.

Other data showed British service sector output posted its smallest fall in six months during April. "The latest news on the manufacturing and services sectors confirmed that the economy's rate of contraction eased markedly in the second quarter," Capital Economics analyst Jonathan Loynes said.

(Reuters)

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Thursday July 02, 2009

NEW YORK: The dollar advanced against a basket of major currencies on Tuesday after a report showing an unexpected drop in US consumer confidence for June prompted investors to seek shelter in the greenback. The weak consumer confidence report drove Wall Street stocks lower, revived the dollar after an early sell-off and dampened hopes of an imminent global economic recovery.

"The market is getting comfortable with the 'green shoots' theory so investors need a high hurdle for them to buy currencies other than the dollar," said David Watt, senior currency strategist at RBC Capital Markets in Toronto. "We're still seeing stress and strains in the market. We're going into the earnings season now that the second quarter has ended and people are cautious."

The ICE Futures' dollar index, however, ended the second quarter on a weak note, down 6.2 percent - its first quarterly drop since the first three months of 2008. On the month, the dollar index rose 1.2 percent. Analysts also said the simultaneous end to the month, quarter and first half of the year led to increased volatility in foreign exchange trading, exacerbating intraday moves in currencies.

But these month-end and quarter-end flows have supported the dollar, analysts said, as investors sought to rebalance portfolios. In late afternoon trading in New York, the euro last changed hands down 0.4 percent at $1.4024 after trading as high as $1.4152 earlier, according to Reuters data. Still, the euro was up 5.9 percent in the second quarter, its best quarterly performance since March 2008.

The dollar index, which measures the value of the greenback against a basket of currencies, traded up 0.5 percent on the day at 80.202. The dollar also rose 0.24 percent against the yen 96.36 yen. It fell 2.7 percent in the second quarter, but was up 1.2 percent in June.

Dollar buying ensued after a report showed the Conference Board's US consumer confidence index fell in June to 49.3 from a downwardly revised 54.8 in May. Economists polled by Reuters had forecast a reading of 55.0. The confidence index followed a report showing a smaller-than-expected decline in US home prices in April and a Chicago purchasing managers' report on business activity in the US Midwest.

Investors have sold US dollars recently as stock markets and oil prices rose on an upbeat view for prospects of a global economic rebound, hurting demand for the greenback as a safe haven. The MSCI global stocks index, which fell 0.7 percent on Tuesday, posted its best quarterly gain since its launch in 1988 at 21.2 percent.

Oil, meanwhile, hit an eight-month high of $73.38 a barrel earlier, but dropped more than 2 percent as the dollar strengthened. The expectation of global economic improvement gained support from the CBOE Volatility Index, Wall Street's fear gauge, which on Tuesday fell to its lowest level since September 12, just before Lehman Brothers collapsed.

That pushed currency volumes lower, too, with the one-month implied vols in euro/dollar falling to 12.6 on Tuesday from about 23.2 at the start of the year. Some analysts say the drop in currency volatility could trigger a downturn in the dollar. Others, on the other hand, are not buying the decline in vols and current market uncertainty should ensure that volatility remains elevated.

"If there is any certainty ahead on the policy front, it is elevated uncertainty and it will make for higher volatility ... in asset prices and FX," said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Connecticut. "The longer-term direction is another story - though the consensus view of weak US Treasuries and dollar is compelling - the only difference for me from mainstream is that I would throw lower stocks in as well.

(Reuters)

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