User Name: Password:      Register - Lost password?

 


 


Forex Blog - Forex News - Forex Research


Back to The Headlines

Tuesday January 22, 2008 - 12:55:20 GMT
Reuters - www.reuters.com

Share This Story:
| | Email

FOREX NEWS-Yen reverses and weakens as US rate cut hopes mount

Tue Jan 22, 2008 7:51am EST

(Changes byline, updates prices, adds quotes)

By Jamie McGeever

LONDON, Jan 22 (Reuters) - The yen turned course and weakened on Tuesday, easing from two-and-a-half-year peaks against the dollar hit earlier in the day as the global stock market rout fuelled speculation of an emergency U.S. interest rate cut.

Federal Reserve action could shore up confidence in battered markets and limit the damage being inflicted on the U.S. economy from the financial turmoil, thus boosting investor appetite for carry trades again.

Asian and European equities had earlier dived as fears of a U.S. recession spread like wildfire, prompting currency traders to unwind carry trades and push the yen to its highest level against the dollar since May 2005.

These moves and deep underlying nervousness fuelled speculation the Federal Reserve will deliver an emergency rate cut of up perhaps 75 basis points before the Wall Street open to shore up confidence in battered financial markets.

Rate cut hopes and a desperate need for some respite took the steam out of the yen's rally. But with U.S. stock futures still pointing to losses of around 4-5 percent at the open and Bank of America announcing over $5 billion in fourth quarter writedowns (BAC.N: Quote, Profile, Research), markets remain extremely nervous.

"Everyone is positioning for a cut but I think they'll be disappointed," said Russell Bloom, analyst at Action Economics in London.

"Markets are hoping for a policy response out of the U.S. today but what that is remains to be seen. Investors are squaring up ahead of the U.S. session," agreed Russell Jones, head of currency strategy at RBC Capital Markets in London.

At 1225 GMT the dollar was up 0.2 percent on the day versus the yen at 106.20 yen <JPY=>, having earlier fallen as low as 105.63 yen. That marked a near 5 percent decline this month, on track for the pair's biggest monthly loss in years.

The euro also bounced back against the yen, up 0.5 percent at 154 yen <EURJPY=>, having earlier traded at a five-month low of 152.12 yen.

The euro rebounded from a one-month low against the dollar below $1.4490 <EUR=>.

ALL EYES ON FED

The Nikkei stocks average .N225 and emerging equities .MSCIEF tumbled more than 5 percent, while European stocks dropped as much as 4 percent before recovering some ground.

All eyes are now on U.S. equities and the policy response to the market crisis unravelling this week.

"The question then is whether the selloff in equities to date, including the decline that is being priced into U.S. futures markets today after yesterday's global markets plunge, could force officials to move just one week before their scheduled January 29-30 meeting," wrote UBS strategists in a note to clients.

"The risk has clearly risen. Whether they act quickly or wait will likely depend on whether the roughly 5 percent decline in the U.S. market currently being signalled by futures is pared back or added to in U.S. trading today."

UBS now predicts a U.S. recession this year, albeit a mild one.

Interest rate futures expect the Fed to slash benchmark rates to below 2.5 percent this year from 4.25 percent currently, starting with 75 basis points of easing this month, perhaps even before the U.S. stock market open on Tuesday.

Treasury Secretary Henry Paulson is due to deliver scheduled remarks on the economy at 1300 GMT.

On the other side of the Atlantic, euro zone rates have remained stubbornly high but financial markets interpreted remarks from a European Central Bank policymaker last week as a signal interest rates may come down in order to support the region's slowing economic growth.

Euro zone interest rate futures now expect around 75 basis points of ECB easing this year from 4 percent currently. Futures at the start of January pointed to the ECB on hold all year.

© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

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."

Most Popular Links



Forum Directory

Live Trading Forums
Forex Forum
Forex + Live Forex Rates
Forex Forum + Live FX Rates
Futures Forum
GVI Forex (by subscription)
Political Forum
Help/Open Forum
Education / Learning Forum

 

Contact us if you need advice in selecting a broker. We will be pleased to assist.






Global-View.com Chart Gallery
02/09//2010                
10:57 GMT   2yr bp 10yr bp DJIA 9908 -23
USDX 80.13 -17 0.78 0 3.59 0 S&P 1057 -9
USD vs.             NAS 2126 -4
EUR 1.3713 57 1.02 2 3.16 1 DAX 5504 19
GBP 1.5577 23 1.23 2 3.98 3 FTSE 5119 26
CHF 1.0692 35 0.46 0 1.95 -1 SMI 6353 #REF!
JPY 89.62 31 0.16 0 1.35 -1 NIK 9933 -19
CAD 1.0695 47 1.09 -1 3.34 -1 TSE 11115 -108
AUD 0.8704 58 4.11 3 5.38 -3 ASX 4505 -16
NZD 0.6889 55         HSI 19790 239
CNY 6.8277 2         SSEC 2949 14
EUR vs. GBP vs.   CHF vs.  
JPY 122.90 93 JPY 139.60 28   JPY 83.82 56
GBP 88.03 50 CHF 166.55 79   Gold 1068.1 5.20
CHF 1.4662 13         WTI 72.28 0.39
Related Trading Tools Pages
FX Database Live FX Rates
FX Chart Points Live Forex Charts
Live USDX Charts
QUICKLINKS Live Various Market Rates
Economic Calendar
Forex Blog Market Tracker
 
 




Extensive Free Daily Technical Chart Points

2/8/2010 EURUSD USDJPY USDCHF GBPUSD USDCAD
Close 1.3659 89.28 1.0724 1.5604 1.0744
High 1.3714 89.56 1.0772 1.5660 1.0746
Low 1.3622 89.15 1.0685 1.5536 1.0658
Mov avgs EURUSD USDJPY USDCHF GBPUSD USDCAD
5 day 1.3783 89.76 1.0650 1.5772 1.0675
10 day 1.3878 89.92 1.0589 1.5925 1.0660
20 day 1.4091 90.35 1.0446 1.6091 1.0526
50 day 1.4353 90.50 1.0358 1.6143 1.0514
100 day 1.4596 90.17 1.0274 1.6246 1.0559
200 day 1.4348 92.56 1.0519 1.6249 1.0855
Pivots 1.3665 89.33 1.0727 1.5600 1.0716

Source: Free Global-View FX Database

Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Currency Forum Guide
Forex Forum RSS

Other Forums
Forum Directory
Nuts and Bolts
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

Charts and Quotes
Live FX Rates
Live Global Market Quotes
Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Forex Signals
FX Bookstore
Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

 

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.

Copyright ©1996-2008 Global-View. All Rights Reserved.
Hosting and Development by Blue 105