Friday June 20, 2008 - 10:17:51 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS - Dollar weighed by rising oil, insurer jitters
FOREX-Dollar weighed by rising oil, insurer jitters
* Dollar down as oil rallies above $132
* Jitters revived as Moody's cuts two U.S. insurer ratings
* Focus turning to FOMC amid thin data calendar
By Michael Taylor
LONDON, June 20 (Reuters) - The dollar fell against a basket
of major currencies on Friday after a rally in oil and a ratings
downgrade of two U.S. insurers that raised fresh jitters about
the financial sector and broader U.S. economic health.
Investment bank Citigroup (C.N: Quote, Profile, Research, Stock Buzz) also warned late on Thursday
that it could take substantial writedowns in the second quarter.
Oil CLc1 rose above $132 a barrel after a near $5 plunge
on Thursday, on China's move to raise fuel prices, as traders
weighed the impact on demand in the world's second-largest oil
The dollar has tended to fall when oil prices surge due to
speculation that oil-producing countries may use the increased
dollar-denominated windfall from crude exports to buy euros and
other currencies to diversify their portfolios.
Investors will be alert to the outcome of a meeting on
Sunday in Saudi Arabia between consumers and producers to
discuss the surge in crude.
Continuing jitters over the now 10-month-old credit crunch
were highlighted as Moody's Investors Service stripped the
insurance arms of Ambac Financial Group (ABK.N: Quote, Profile, Research, Stock Buzz) and MBIA Inc
(MBI.N: Quote, Profile, Research, Stock Buzz) of their Aaa ratings late on Thursday, citing their
impaired ability to raise capital and write new business.
"People are still broadly reacting from (Moody's
downgrades)...as people continue to worry about ongoing
pressures in the financial sector," said Rabobank markets
strategist Jeremy Stretch.
By 0827 GMT, the dollar was down 0.3 percent on the day
versus a basket of six major currencies .DXY, having hit a
one-week low on Thursday at 73.205.
The euro gained 0.4 percent to $1.5568 <EUR=> and rose 0.3
percent to 167.88 yen <EURJPY=>, closing in on an 11-month high
hit on Wednesday at 168.03 yen.
Against the Swiss franc, the dollar shed 0.4 percent to
1.0403 francs <CHF=> -- letting go of gains made on Thursday
after the Swiss National Bank elected to keep its borrowing
costs on hold at 2.75 percent.
U.S. data on Thursday did little to improve the dollar's
fortunes as output in U.S. Mid-Atlantic factories pulled back
for the seventh straight month as costs shot up to a 28-year
With little of note in terms of economic data out of the
U.S. and Europe on Friday, dealers said major currencies were
likely to trade in fairly narrow ranges ahead of next week's
Federal Reserve interest rate-setting meeting and accompanying
UBS analysts said in a note to clients that the U.S. central
bank's statement may be less hawkish than some might expect,
particularly after a series of inflation-fighting comments from
"We believe that Fed tightening expectations remain
overdone, and under such conditions upside in the greenback is
fairly limited," the bank said.
The Canadian dollar was supported after Bank of Canada
Governor Mark Carney on Thursday said an unprecedented rise in
commodity prices required a "relentless focus on inflation".
The BOC unexpectedly held its key interest rate at 3 percent
last week and signalled an end to its rate-cutting cycle as
inflationary pressures were surprisingly strong.
The U.S. dollar edged down 0.1 percent to C$1.0146 <CAD=>.
(Reporting by Michael Taylor; Editing by Malcolm Whittaker)
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."