Monday March 10, 2008 - 11:25:09 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar down, low yielders up as risk aversion in play
(Changes dateline, byline, updates prices, adds quotes)
By Simon Falush
LONDON, March 10 (Reuters) - The yen and Swiss franc gained
on Monday and the dollar slipped toward record lows as weak U.S.
employment data on Friday added to concerns about the health of
the world's largest economy and heightened global risk aversion.
Japan's benchmark Nikkei .N225 fell to its lowest in 2-1/2
years and European stocks opened lower as poor U.S.
data hit sentiment and led investors to head to the relative
safety of low yielding currencies like the yen and Swiss franc.
"It's a carry-over from last week's payrolls data and the
credit stories rumbling on with the iTraxx Crossover index near
all-time wides," said Chris Turner, head of FX strategy at ING.
The Federal Reserve announced a series of term repurchase
operations totalling $200 billion to ease liquidity pressures,
adding to a sense that the money markets are in poor shape.
"The market is nervous, we'll continue to see aggressive
responses from the Fed and the fact that the Fed added extra
liquidity last week shows that it must be concerned about
problems somewhere in the market," ING's Turner said.
The dollar fell around 0.5 percent on the day to 102.24 yen
<JPY=>, but held above an eight-year low of 101.41 yen struck on
Friday, according to Reuters data.
The euro rose 0.2 percent to $1.5380 <EUR=>, edging back
towards a record high of $1.5459 hit on Friday.
The dollar slipped 0.4 percent against the low yielding
Swiss franc to 1.0216 francs <CHF=>, nearing an all-time low of
around 1.0135 francs hit on Friday.
The dollar index, which measures the dollar's value against
a trade-weighted basket of major currencies, fell to 72.858
.DXY, edging back towards a record low of 72.462 hit on
The implied probability for the Fed to lower interest rates
by a full percentage point this month rose to around 25 percent
after the jobs data on Friday, but later receded.
Investors still expect the Fed to cut interest rates by 75
basis points from 3 percent this month, however. FEDWATCH
The European Central Bank kept interest rates steady at 4
percent last week and a Reuters poll of economists showed no
forecasts for an ECB rate cut in April. [ECB/INT]
However investors will closely watch comments from ECB
President Jean-Claude Trichet at the Bank for International
Settlements bi-monthly meeting in Basel for hints on possible
moves from central banks to address recent sharp moves in
Trichet sounded a hawkish note at his news conference
following last week's rate decision.
"Expect a familiar rhetoric (from Trichet today) with the
ECB not in the mood to cut interest rates for now," said CIBC
World Markets in a note to clients.
(Editing by Mike Peacock)
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