Monday January 28, 2008 - 12:39:31 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS - Stocks sell-off keeps currencies in risk-averse mode
(Changes byline, updates prices, adds quotes)
By Toni Vorobyova
LONDON, Jan 28 (Reuters) - The yen was firmer across the
board on Monday as demand for risky trades eased with stocks
once again on the back foot amid persistent worries that a
slowing U.S. economy will hit corporate profits.
Currency investors have been using stocks as a guide for how
much risk to take, favouring risky carry trades -- in which the
low-yielding yen is used as a source of cheap funds to buy
higher-yielding currencies -- whenever equities rally and
reversing those trades when they fall.
European stocks fell around 2 percent after a drop of nearly
4 percent on Tokyo's bourse, and Wall Street futures also
signalled a lower open.
"The feeling is of a moderate risk aversion, really
currencies are taking their cues from the equity market," said
Adam Cole, global head of FX currency strategy at RBC Capital
"The mood's certainly negative on the U.S. economy and U.S.
equity market," he added, noting that this was also
dollar-negative as long as it did not spark a rush of
repatriations from U.S. investors as in previous recessions.
The dollar fell 0.25 percent against a basket of major
currencies to 75.789 .DXY. The euro rose 0.3 percent to
The dollar also eased to 106.41 yen <JPY=>, bringing its
losses since the start of January to nearly 4.5 percent --
likely heading for its worst monthly performance in over 4
Markets are betting that the Federal Reserve will cut
interest rates by as much as 50 basis points after the two-day
policy meeting ending on Wednesday, following last week's hefty
75-basis-point cut in a rare move between scheduled meetings.
"Assuming these expectations do not shift much, a 50 bps --
or larger -- Fed ease, especially if coupled with a still-dovish
statement, should give at least a short-term lift to risk
appetite, and in turn, carry trades," JP Morgan said in a
All eyes will also be on a batch of data this week for clues
on the U.S. economy's health, including December new home sales
figures at 1500 GMT and the non-farm payrolls report on Friday.
Events later in the day feature results from corporate
heavyweights including American Express and McDonald's, as well
as speeches by a few ECB officials and President George W.
Bush's State of the Union address.
Bush and congressional leaders have been trying to thrash
out a $150 billion stimulus package to help to limit the
economy's downturn this year from a reeling housing market.
In television interviews at the weekend, U.S. Treasury
Secretary Henry Paulson said the Senate should quickly approve
the stimulus proposal to boost the sagging economy.
(Editing by Stephen Nisbet)
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
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."