FOREX NEWS-Dollar rallies as U.S. bond yields jump, oil retreats
Thu May 29, 2008 7:48am EDT
By Naomi Tajitsu
LONDON, May 29 (Reuters) - The dollar rose against a basket of major currencies on Thursday after hawkish Federal Reserve comments prompted a jump in short-dated U.S. bond yields, lifting demand for assets denominated in the U.S. currency.
The U.S. currency was also bolstered after U.S. durable goods data came in less weak than expected, quelling some jitters about U.S. economic health. Retreating oil prices also offered broad dollar support.
"We've seen a big uptick in U.S. yields," said David Pais, currency strategist at Citigroup. "It's very much U.S.-euro yield differentials that is driving euro/dollar lower."
The euro slipped 0.5 percent to $1.5547 <EUR=>. Some traders also said that selling in the pair by Russian names was pulling the pair away from one-month highs hit earlier this week at $1.5818.
Two-year Treasury yields <US2YT=RR> surged 12 basis points to 2.7546 percent, its highest since the start of the year, after Dallas Fed President Richard Fisher on Wednesday said that U.S. rates may rise "sooner rather than later" if inflation persists [ID:nN2852973].
In the euro zone, the two-year Schatz yield <EU2YT=RR> hit a nine-month high of 4.303 percent, but its rise was only half that of its U.S. counterpart.
The euro also lost ground after figures showed the first rise in Germany's seasonally adjusted jobless total in over two years [nBAE001233]. At the same time, euro zone economic sentiment stabilised in May, but consumers became more gloomy.
The dollar rose half a percent on the day to 72.926 against a basket of six major currency rivals .DXY, approaching a two-week high. It rallied by the same amount to 105.29 yen <JPY=>.
Analysts also said that an ongoing retreat in U.S. crude oil prices from a record high at $135.09 per barrel CLc1 was also prompting technical gains in the dollar.
INFLATION VS GROWTH
Data on Wednesday showing U.S. durable goods orders fell by a smaller-than-expected 0.5 percent last month bolstered a view that the U.S. central bank may have left its aggressive monetary easing campaign behind it for now after slashing borrowing costs to 2 percent.
But hawkish comments from Fed members Fisher and Minneapolis Fed President Gary Stern, who said that the Fed must quit its monetary easing campaign at some point, suggested that inflation risks were not far away from policymakers' minds.
While the statements suggest that the U.S. central bank may soon end its rate-cutting cycle, analysts were wary about how sustainable dollar resilience was in light of a potentially toxic inflation versus growth mix.
"A hawkish Fed, or a more hawkish Fed, does not necessarily mean a stronger dollar in our view -- given the fact that the growth outlook still remains uncertain, consumer confidence is very weak and oil is high," said Phyllis Papadavid, currency strategist at SocGen.
"The Fed like most central bankers is stuck between a rock and a hard place and their hawkishness is not reflective of comfort on the growth outlook, it's more to do with prospects for ugly inflation," she added.
Inflation and growth will dominate the U.S. data agenda later on Thursday, with core PCE (personal consumption expenditure) prices and U.S. first quarter preliminary GDP figures due at 1230 GMT. (Additional reporting by Veronica Brown, editing by David Christian-Edwards)
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."
Elevate Your Trading With The Amazing Trader!
The Amazing Trader includes:
Actionable trading levels delivered to YOUR charts in real-time.
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.