FOREX NEWS-Expectation of hefty Fed cut keeps dlr near lows
Tue Mar 18, 2008 7:38am EDT
(Changes byline, updates prices, adds quotes)
By Toni Vorobyova
LONDON, March 18 (Reuters) - The dollar eased back towards the previous day's record lows versus the euro on Tuesday on expectations of a hefty Federal Reserve rate cut that will make the U.S. currency the second lowest yielder in the G10.
Markets are pricing in a cut of at least 100 basis points to the Fed's benchmark lending rate from the current 3 percent and are giving a 1-in-5 chance of an even bigger 125 basis points.
Expectations of rate cuts have deepened after JPMorgan's (JPM.N: Quote, Profile, Research) purchase of stricken rival Bear Stearns (BSC.N: Quote, Profile, Research) for a rock-bottom $2 a share and the Fed's emergency step of cutting its discount rate by 25 basis points on Sunday spooked markets.
On Monday, the dollar tumbled to record lows versus the euro, Swiss franc and a basket of major currencies, and fell further below the psychological 100 yen mark.
It remained on the back foot on Tuesday, although a little off those lows.
"Markets have stabilised but that's not changing the fundamental situation in the U.S," said Geoffrey Yu, FX stategist at UBS in Zurich.
"There is speculation the Fed could cut rates by 100 basis points. That's going to put the U.S. as the second lowest yielding currency in the G10, below even the Swiss franc. We might be entering the stage when people will be looking at the dollar as a funding currency," he added.
By 1124 GMT the euro was up half a percent at $1.5813, moving back towards Monday's record peak of $1.5904 <EUR=>.
The dollar was down a similar percentage against a basket of six major currencies .DXY at 71.117.
Illustrating the market's focus on yield, the Australian <AUD=> and New Zealand <NZD=> dollars -- with interest rates of 7.25 and 8.25 percent respectively -- were among the day's biggest gainers.
The Canadian dollar, meanwhile, rose to session highs versus the greenback as above-forecast February core inflation data was seen limiting the scope for future rate cuts <CAD=>.
The dollar was flat on the day versus the low-yielding yen but, at 97.40 yen, stayed well under the 100 mark breached last week <JPY=>. It also remained below parity at 0.9843 Swiss francs <CHF=>.
The yen showed a relatively muted reaction to the Japanese government's nomination of a former top finance ministry official, Koji Tanami, as its second candidate to run the Bank of Japan after Toshihiko Fukui retires on Wednesday.
The global credit squeeze continued to be reflected in short-term money markets, with overnight U.S. dollar deposit rates rising as high as 3.85 percent on Tuesday, having moved above 4 percent on Monday <USDOND=>
The dollar's sharp sell-off on Monday led traders to fret about the possibility of joint dollar-buying intervention by U.S., Japanese and European authorities.
Japan's top financial diplomat, Naoyuki Shinohara, said he was told by Prime Minister Yasuo Fukuda to keep in close contact with other Group of Seven members on developments in global financial markets.
European Central Bank have recently expressed concern about "excessive" moves in currencies, but analysts say the ECB may be willing to accept the strong euro to help rein in inflation.
The ECB's main task is to keep prices stable and avoid second round inflation effects, Executive Board member Lorenzo Bini Smaghi told a Brazilian newspaper, adding that exports have held up well in recent years despite the rise in the euro.
Some companies though are clearly being hit. The head of French aerospace industry association said a euro at $1.60 would be unbearable and could cause some companies in the sector to go bankrupt [ID:nPAC009370].
U.S. housing starts and producer price data for February are due at 1230 GMT, ahead of the 1815 GMT Fed decision.
"There's a lot of discussion that after the Bear Stearns collapse, no one is safe. So some reassuring news for the sector may have the ability to just take a little heat out of the situation," CMC Markets said in a note to clients.
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."
Actionable trading levels delivered to YOUR charts in real-time.
Mon 10 Sep 2018 AA 08:30 GB- GDP, Trade, Output Tue 11 Sep 2018 AA 08:30 GB- Employment Decision A 09:00 DE- ZEW Survey Wed 12 Sep 2018 A 12:30 US- PPI A 14:30 US- EIA Crude A 18:00 US- Beige Book Thu 13 Sep 2018 A 1:30 AU- Employment AA 11:00 GB- Bank of England Decision AA 11:45 EZ- European Central Bank Decision A 12:30 US- Weekly Jobless AA 12:30 US- CPI Fri 14 Sep 2018 A 08:30 GB- GDP AA 12:30 US- Retail Sales A 13:15 US- Industrial Production AA 14:00 US- prelim University of Michigan
John M. Bland, MBA co-founding Partner, Global-View.com
Global-View Affiliate Program
We are starting an affiliate program to market some of our products.
Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.
Put the word "affiliate" in the email subject line.
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.