Monday April 21, 2008 - 11:31:21 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar down as jitters persist, Stg falls on BoE plan
(changes dateline, byline, adds quotes, updates prices)
By Veronica Brown
LONDON, April 21 (Reuters) - The dollar fell against a
basket of major currencies on Monday, with residual nerves about
inflation pressures outweighing the positive spin seen from
first quarter banking results last week.
Investors were still worrying about the inflationary effect
of oil prices, which stayed on firm ground, near a record high
of $117.40 a barrel.
Sterling fell, with markets unimpressed by a Bank of England
offer to swap government bonds worth 50 billion pounds for
banks' riskier mortgage debt to help them navigate through the
(For details please double click on [ID:nL21535439])
Results on Friday from Citigroup (C.N: Quote, Profile, Research), the largest U.S.
bank, showed less damage from the credit market crisis than some
had expected with writedowns of $6 billion contrasting with
market rumours of writedowns approaching $22 billion.
But investors, who have witnessed several 'false dawns' in
the credit crisis, were reluctant to place too much faith in the
banking results as marking the beginning of the end for the
"Markets were hoping to come in today with a slightly more
optimistic outlook for credit and risk appetite, but there's
residual nervousness with oil prices continuing to squeeze up,"
Rabobank markets strategist Jeremy Stretch said.
"Markets are reasonably encouraged by the risk environment
but maybe we've got a little bit ahead of ourselves and it's a
case of having a bit of a reassessment this morning," he added.
By 0829 GMT, the dollar was down 0.1 percent against a
basket of six major currencies .DXY at 71.852. Against the yen
it also fell 0.1 percent <JPY=>, having earlier closed in on
7-week highs hit last week.
The euro gained almost 0.3 percent to 1.5856 <EUR=> but
stayed well below last week's record high of $1.5983. Hawkish
European Central Bank inflation rhetoric continued to support
the common currency, and Governing Council member Klaus
Liebscher said he saw certain indicators of second round effects
in the euro area.
The comments were seen as continuing to cement expectations
that euro zone interest rates will stay at 4.0 percent for now.
BOE PLAN FAILS TO IMPRESS
Despite a tentative pickup in risk appetite from last week's
banking results and Royal Bank of Scotland (RBS.L: Quote, Profile, Research), Britain's
second-biggest bank, confirming it is considering a rights
issue, UK markets had been on tenterhooks over the plan to help
ease the strains in British mortgage markets.
But the pound extended losses in reaction to the news,
falling around 0.4 percent versus the dollar to $1.9887 <GBP=>,
while the euro was up 0.8 percent at 79.83 pence <EURGBP=>.
"The plan didn't offer any massive surprises ... Sterling
has had a good run over the last few days on the news and so
it's a bit of the 'buy the rumour, sell the fact'," said Daragh
Maher, senior currency strategist at Calyon.
For more clues on the corporate earnings front, investors
were awaiting reports from Bank of America (BAC.N: Quote, Profile, Research), the No.2
U.S. bank, due later in the day.
"If the bank's earnings are within expectations, the dollar
will likely rise further," said Mitsuru Sahara, senior trader at
Bank of Tokyo-Mitsubishi UFJ.
But if the report card contains some nasty surprises,
investors are likely to see no fundamental changes in the
long-term downward trend in the dollar, he said.
(Reporting by Veronica Brown; Editing by David Stamp)
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."