USD Is in Stand-by Position

Sure USD moved in some ways today, but still stayed in a relative waiting status if we follow quotes from the market.

After 4 hours, we will get the Fed’s decision and for sure traders will feel the sky less cloudy (at least about the Fed policy…).

Today, Euro/USD got a range of “only” 93 pips (1.5516 - 1.5609).

At posting time (22:25 - GMT+8), Forex quotes are:

EURUSD	1.5556
USDJPY	104.605
GBPUSD	1.9741
USDCAD	1.0065
USDCHF	1.0395
EURCHF	1.6171
EURGBP	0.788
EURJPY	162.7235
USDTWD	30.4475
AUDUSD	0.9391
NZDUSD	0.7809
USDSGD	1.3587
EURTWD	47.3641

 

Technorati Tags: Forex, Currencies, Rates, fvarga

Dollar Heads for Monthly Gain Against Euro on View Fed to Pause

The dollar is headed for its first monthly advance against the euro this year on speculation a cut in interest rates by the Federal Reserve today will be followed by comments signaling policy makers are about done with easing.

The U.S. currency was poised for its biggest monthly gain against the yen since December 2001 as interest-rate futures showed the Fed may keep rates on hold after reducing borrowing costs.

The yen dropped against all of the major currencies as an advance in U.S. stocks encouraged investors to increase holdings of higher-yielding assets financed in Japan.

The dollar traded at $1.5567 per euro at 9:49 a.m. in New York, from $1.5572 yesterday. The dollar strengthened 0.5 percent to 104.56 yen, from 104.02. The euro increased 0.5 percent to 162.76 yen, from 161.97 yesterday.

The U.S. currency has advanced 5.3 percent against the yen and 1.5 percent versus the euro this month. Still, it’s down 6.6 percent against the euro and 6.9 percent versus the yen in 2008. The euro is up 3.7 percent versus the yen in April, paring this year’s losses to 0.2 percent.

Still 4 hours to wait the Fed decision…

 

Technorati Tags: Fed, USD, Interest Rate, Currencies, Forex, fvarga

Dollar Mixed Ahead of Fed

The greenback was mixed in the Tuesday session, advancing versus the euro while relinquishing gains against the sterling and the yen.

The economic calendar saw the release of the April consumer confidence survey, which declined to 62.3, albeit less than expected, from 64.5 from March.

The major currency pairs will likely trade within range ahead of the FOMC policy decision tomorrow afternoon. We expect the Fed to ease policy by 25-basis points to 2.0% while maintaining a downbeat outlook on the economy similar to its previous statement.

Nonetheless, we anticipate the Fed to leave policy unchanged for the remainder of the year after this week’s rate cut given the aggressive easing that has already materialized.

Technorati Tags: Fed, Interest Rates, USD, fvarga

Back to Post

I had a long week-end (3 days) and went to sightseeing in the East side of Taiwan (Taroko Gorges). Amazing!

I will post pictures on my personal Blog.

OK, let’s go back to work.

                                      

Technorati Tags: Relax, fvarga

Yuan Posts Biggest Weekly Loss in 8 Months on Economy Concern

The yuan posted its biggest weekly loss in eight months on speculation the central bank will curb the currency’s appreciation as the economy slows.

China’s currency snapped two weeks of gains as the state- run Chinese Academy of Social Sciences said the economy will grow 10.7 percent this year, slowing from a 13-year high of 11.9 percent in 2007 because demand for exports will weaken.

Premier Wen Jiabao said last week the country will balance the risk of a slump in growth against the threat from inflation at an 11-year high.

“Government officials are worried about a slowdown in the economy just as inflation poses a headache to them,” said Xing Ziqiang, an economist in Beijing with China International Capital Corp., the first Sino-foreign investment bank in China. “Textile companies and consumer goods producers are suffering quite a slowdown in export orders.”

The yuan fell 0.19 percent to 7.01 as of the 5:30 p.m. close in Shanghai, compared with 6.9970 yesterday, according to the China Foreign Exchange Trade System.

It has dropped 0.24 percent this week, the most since the five-day period ended Aug. 17. The U.S. currency has rallied this week, poised for the best week in a month against the euro.

The yuan’s appreciation has been “too fast” and the government should stabilize the foreign-exchange market, Market News International reported, citing a study by a government research institute. The State Information Center wrote in a report that one-way gains in the yuan are fueling expectations of further appreciation, according to Market News.

“We think primarily the yuan’s weakness is due to the dollar’s strength across all the majors,” said Emmanuel Ng, a currency strategist with Oversea-Chinese Banking Corp. in Singapore. “Don’t forget the yuan is supposed to track its value relative to a basket of currencies.”

China’s central bank has been managing the yuan since the end of a dollar link in July 2005. All but one of the 10 most- active currencies in Asia fell in the last five days.

China’s economy grew more than 10 percent in the first three months of the year for the ninth straight quarter and consumer prices rose 8.3 percent in March, according to government data.

The state academy said inflation will accelerate to 5.5 percent in 2008 from 4.8 percent last year. The government needs to stick to “tight” monetary policy and “prudent” fiscal policy to prevent overheating and cool inflation, the academy added.

“As long as inflation remains high, they would allow the yuan to appreciate further,” said Tetsuo Yoshikoshi, a market analyst with Sumitomo Mitsui Banking Corp. in Singapore. “They may loosen the grip on the yuan in the second half when a deceleration in Chinese exports materializes.”

There are “major imbalances” in trade between the China and the European Union and both agree on the necessity to “rebalance” it, European Commission President Jose Manuel Barroso said today in Beijing after meeting China’s Premier Wen.

Government bonds declined on speculation demand for debt will decline after China’s stocks extended yesterday’s record advance sparked by a reduction in the tax on equity trading.

 

Technorati Tags: Economy, China, Yuan, USD/CNY, fvarga

Dollar Mixed Versus Majors Ahead Of Consumer Sentiment Reading [EUR/USD]

The dollar was mixed against other majors Friday morning in New York, rising further against the euro before levelling off while falling sharply against the resurgent sterling.

The dollar was coming off its biggest one-day gain in years versus the euro, bolstered by talk that the Fed will soon pause from cutting rates.

The dollar extended its gains from the previous session against the euro in early dealing Friday, rising to a 3-week high of 1.5554 before giving back a fraction of its gains to trade at 1.5615 approaching mid-morning.

The euro has come under pressure following a much weaker than expected German business survey. Germany’s index of import prices increased 5.7% year-on-year in March, slower than the 5.9% expected, the Federal Statistical Office reported Friday.

In February, import prices rose 5.9% followed by 5.2% increase in January.

Also Friday morning, the European Central Bank said that Euro zone M3 money supply grew at a slower pace of 10.3% from the prior year in March.

The buck raced lower against the sterling Friday morning after government data showed that the UK economy registered an annual growth of 2.5% in the first quarter. The dollar plunged more than 2 cents to 1.9884 from a weekly high of 1.9675.

The GDP growth stood below 3% in the same period of previous year and 2.8% recorded in the fourth quarter of 2007. Economists had expected an annual expansion of 2.6% for the first quarter.

The dollar rose to a 2-month high of 104.81 versus the yen Friday morning, but quickly fell back towards its overnight level near 104. The buck was little changed against the loonie, bouncing back and forth near 1.0174 in Friday’s early dealing.

Friday’s light economic calendar is highlighted by the release of the University of Michigan consumer sentiment survey for April. Economists expect the sentiment index to remain steady at a reading of 63.2.

Technorati Tags: Currencies, Forex, USD, Euro, GBP, fvarga

Euro Extends Yesterday’s Downtrend As Euro-zone Money Supply Growth Slows More-Than-Expected

The Euro extended its yesterday’s downtrend against other major currencies in early deals on Friday as the Euro-zone M3 money supply grew at a slower pace in March. The euro fell to 3-week lows against the dollar and the pound and a 1-week low against the yen.

The European Central Bank indicated today that the Euro zone M3 money supply grew at a slower pace of 10.3% year-on-year in March.

The growth eased from 11.3% registered in the previous month and was lower than the 10.6% growth expected by economists. The three-month average of the annual growth rates of M3 from January to March declined to 11.1% from 11.5% in three months to February.

The Euro dropped to a 3-week low of 1.5557 against the dollar in early trading on Friday, compared to yesterday’s closing value of 1.5684.

The euro has been in a downward channel against the dollar since Tuesday when the pair hit a record high of 1.6020. Since then, the euro has depreciated around 3%.

Weak German business sentiment data released yesterday dragged the euro sharply lower. The Munich-based IFO research institute said today that the German business climate index fell to 102.4 in April from 104.8 in March and it dropped below the expected level of 104.3.

Apart from the euro, the dollar gained against other majors today on increasing speculation that the Federal Reserve will stop cutting rates after reducing them by 25 bps when it meets next week.

The dollar soared to a 2-month high of 104.83 against the yen as a surge in stock prices gave traders confidence to buy higher-yielding assets with money borrowed from Japan.

The dollar climbed to a 7-week high of 1.0433 against the Swiss currency. Against the pound, the dollar rose to a 9-day high of 1.9679 before losing ground at 3:15 am ET.

In early deals today, the European currency slipped to a 1-week low of 162.68 against the yen compared to yesterday’s North American close of 163.48.

Japan’s annual inflation accelerated to a 10-year high of 1.2% in March, the Ministry of Internal Affairs and Communications said today, marking the biggest annual increase since a 1.8% year-over-year jump in March 1998.

The reading was exactly in line with analyst expectations following an increase of 1.0% in February. Core inflation, which excludes the prices of fresh food, also jumped by an annual 1.2% to match expectations following a 1.0 percent increase in February.

The data puts pressure on the Bank of Japan to raise interest rates from the current 0.50 percent - which the bank has wanted to do for months - in an attempt to rein in prices.

But the BoJ will likely continue to stand pat at their monthly policy meeting that kicks off next Wednesday because of general weakness in the economy. There is even a slim chance that the BoJ could trim interest rates if the United States enters a recession, for fear that Japan might follow.

The European currency declined to a 3-week low of 0.7862 versus the pound in early deals on Friday. The euro-pound pair was worth 0.7948 at yesterday’s close.

A preliminary estimate from the Office for National Statistics revealed today that the UK economy registered an annual growth of 2.5% in the first quarter, slightly lower than the 2.6% growth expected by economists.

On a quarterly basis, the economy expanded 0.4% in the first quarter of 2008, slower than the 0.6% rise in the previous quarter.
The Euro, which closed yesterday’s trading at 1.6241 versus the franc weakened to 1.6193 by about 5:25 am ET Friday.

The ECB has left its key interest rate unchanged at 4% since June last year, and officials are still worried about inflationary pressures in the economy. Euro-zone March annual consumer inflation soared to a record high of 3.6%, well above the ECB’s target of just below 2%.

Technorati Tags: Euro Zone, Economy, EZ, Currencies, Forex, M3, fvarga

USD to One-Month High

The dollar extended its gains on Friday amid a growing conviction that the Federal Reserve’s easing cycle was coming to an end.

The dollar index, which measures its value against a basket of currencies, rose to a one-month high as futures markets moved to price in a thirty-per-cent chance that the Fed would leave its Fed funds rates at 2.25 per cent after its policy meeting later this month.

Earlier this week, the dollar hit a record low of $1.6018 against the euro as futures markets were evenly split between a 25 and 50 basis-point cut.

Analysts said the dollar was also supported by falling commodity prices and stability on global equities markets that was feeding investor risk appetite.

The dollar rose 0.7 per cent to $1.5575 against the euro, climbed 0.3 per cent to Y104.50 against the yen and gained 0.4 per cent to SFr1.0194 against the Swiss franc.

Elsewhere, the euro continued to come under pressure following Thursday’s lower-than-expected Ifo survey of business confidence.

The data prompted a turnaround in eurozone interest rate expectations, with futures markets shying away from predicting further monetary tightening from the European Central Bank.

“We remain convinced that the eurozone economy will slow more sharply in the second half of this year weighed down by the tightening in financial conditions and weaker global activity,” said Mitul Kotecha at Calyon.

“This in turn will be sufficient to pressure the ECB to lower interest rates and drive the euro down further.”

 

Technorati Tags: Currencies, Forex, Euro, EZ, fvarga

CPI in Japan

Japanese consumer prices, stripped of energy and fresh food, rose 0.1 per cent on-year in March, the first increase since 1998 and a sign that Japan could be close to shaking off 10 years of deflation.

The headline core CPI rate, which includes fast-rising energy prices, leapt 1.2 per cent on-year, the highest in 10 years and a better reflection of how consumers perceive price changes.

Of the 1.2 per cent rise in the headline CPI, 0.73 percentage point was due to energy and 0.41 point from food. In yen terms, oil prices are 50 per cent higher than a year ago. Economists have characterised Japan’s rising prices as cost-push inflation.

Hiroko Ota, economy minister, characterised the rise as the wrong kind of inflation. “The price rises are being led by upward pressure from higher raw material costs and not by strong demand, so it is not a good pattern,” she said.

 

Technorati Tags: Economy, Japan, fvarga

USD: Biggest Advance Against Euro Since March

The dollar headed for its biggest weekly gain in a month against the euro and a second winning week against the yen on increasing speculation the Federal Reserve will stop cutting interest rates.

The U.S. currency held near a two-week high versus the euro as the extra yield two-year German government bonds pay over similar-maturity Treasuries narrowed to the least since March 24.

The yen weakened against the euro as falling expectations for exchange-rate swings encouraged investors to buy higher-yielding assets with loans from Japan.

The dollar traded at $1.5690 per euro at 10:43 a.m. in Tokyo from $1.5682 in New York yesterday and $1.5817 on April 18, heading for a gain of 0.8 percent this week.

The dollar may rise above $1.50 by year-end, Fink said. The U.S. currency held at 104.30 yen from 104.26 yen yesterday and 103.67 yen a week ago. Japan’s currency weakened to 163.67 per euro from 163.45 in New York and 163.96 a week earlier.

The yen declined against the euro as implied volatility on options for the six most-active currencies against the dollar fell to 11.08 percent yesterday, from 11.17 percent a day earlier, an index compiled by JPMorgan showed.

The gauge of price swings touched a decade high of 14.48 percent on March 17, a level at which the Group of Seven bought the dollar to check its decline in a coordinated move in 1995.

Japan’s currency fell to 98.19 against the Australian dollar from 97.97 yesterday as rising equity markets boosted confidence in so-called carry trades.

The Nikkei 225 Stock Average climbed 1.9 percent. In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher rates, earning the spread. Japan’s 0.5 percent benchmark interest rate compares with 7.25 percent in Australia.

The currency was little changed after a government report showed Japan’s consumer prices rose the most in a decade as companies foisted higher costs of energy and grains onto customers.

Core consumer prices climbed 1.2 percent in March from a year earlier, the statistics bureau said in Tokyo today.

 

Technorati Tags: Forex, Currencies, Carry Trade, fvarga