FOREX NEWS-Dollar dips as fears rise ahead of bank earnings
Mon Jan 14, 2008 4:48pm EST
By Kevin Plumberg
NEW YORK, Jan 14 (Reuters) - The dollar fell on Monday to its lowest level in seven weeks against the euro and yen on fears that weak U.S. corporate earnings will push the economy closer to recession, requiring the Federal Reserve to slash interest rates.
Some of Wall Street's largest banks will be reporting their earnings this week, beginning with Citigroup on Tuesday, and currency dealers will be watching for indications of how much the credit crisis is damaging their bottom lines and increasing the risk of prolonged economic weakness.
Federal Reserve Chairman Ben Bernanke's comments last week that the central bank stood ready to take "substantive additional action" to maintain growth cemented expectations for a half-percentage point cut in the Fed's benchmark interest rate to 3.75 percent.
Futures are also reflecting a 50/50 chance that the Fed could reduce its interest rate by three-quarters of a point between now and the central bank's Jan. 29-30 policy meeting, giving a fresh reason for dealers to sell dollars.
"It's the reality that the Fed is going to cut 50 and there's an interest-rate play between the currencies," said Andrew Goldberg, managing director of foreign exchange with BNP Paribas in New York.
The euro rose as high as $1.4914, according to Reuters data, breaching the $1.49 level for the first time in seven weeks and closing in on a record high of $1.4966 <EUR=>. It last traded at $1.4865, up 0.6 percent from late Friday.
A 50-basis point cut would put the benchmark U.S. rate below the key euro-zone interest rate for the first time in more than three years. In contrast to the Fed, euro zone policy-makers have remained hawkish, stressing risks from inflation.
The dollar fell to a record low of 1.0888 Swiss francs <CHF=>, before paring losses. It last traded at 1.0925 Swiss francs, down 0.8 percent.
Against the yen, the dollar tumbled to a seven-week low of 107.37 yen <JPY=>. It last traded around 108.21 yen.
Although analysts say a rare inter-meeting cut by the Fed is unlikely, expectations of such a move could get a boost if U.S. banks announce big write-downs linked to the troubles in the subprime mortgage market and consequent global credit crunch.
Citigroup is first in line this week among the banks to report fourth-quarter earnings. The bank could write down as much as $24 billion and cut up to 24,000 jobs, CNBC television said on Monday.
If Citi's earnings come in well below expectations, the dollar as well as currencies that typically do well when investors are more willing to take risks will probably weaken, dealers said.
Weak earnings may have an "impact on confidence and expectations for fed funds (interest rates), and that is spilling over into FX markets," said David Watt, senior currency strategist at RBC Capital Markets in Toronto.
The Australian dollar, which has one of the highest interest rates among the 10 most traded developed currencies, was trading higher, supported by record-high gold prices <XAU=> and strong domestic data. It rose to a two-month high of US$0.9003 <AUD=>, while the New Zealand dollar also was up, rising 1 percent to US$0.7905 <NZD=>.
Sterling was flat at $1.9555 <GBP=>.
In addition to corporate earnings, investors will be on the lookout for December U.S. retail sales and consumer inflation data. Since consumer spending makes up around two-thirds of output, any weakness in retail sales or upward price pressures will be viewed as negative for growth and for the dollar. (Additional reporting by Nick Olivari; Editing by Leslie Adler)
Reuters journalists are subject to the Reuters Editorial Handbook which requires fair presentation and disclosure of relevant interests.
Forex Trading News
Daily Forex Market News Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Forex News Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
Elevate Your Trading With The Amazing Trader!
The Amazing Trader includes:
Actionable trading levels delivered to YOUR charts in real-time.
POTENTIAL PRICE RISK: HIGH to Medium- Wed --14:15 GMT-- US- Industrial Production
POTENTIAL PRICE RISK: HIGH- Wed -- 15:00 GMT-- CA- Bank Of Canada Decision
John M. Bland, MBA co-founding Partner, Global-View.com
Max McKegg's Daily Forex Trading Forecasts
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.