Saturday July 19, 2008 - 00:54:17 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar boosted by Citi results but sentiment shaky
* Citi's smaller-than-expected loss eases credit fears
* Euro capped as Trichet notes risks to growth
* Broad dollar sentiment still clouded by financial woes
(Updates prices, adds comments, changes byline)
By Wanfeng Zhou
NEW YORK, July 18 (Reuters) - The dollar rose on Friday,
heading for its largest weekly gain versus the euro in a month,
after a smaller-than-expected quarterly loss from Citigroup Inc
(C.N: Quote, Profile, Research, Stock Buzz) eased worries about the U.S. financial sector.
Citi's results added to positive earnings news this week
from Wells Fargo & Co. (WFC.N: Quote, Profile, Research, Stock Buzz) and JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz).
That allowed the dollar to regain some strength after slumping
to a record low against the euro on Tuesday.
"Citi earnings have encouraged the market to take on more
risk and given (the dollar) a lift," said Stephen Malyon,
senior currency strategist at Scotia Capital in Toronto.
They were "consistent with other bank earnings seen earlier
this week, which has turned sentiment around on the dollar a
In late afternoon trading in New York, the dollar index,
which tracks the greenback's performance against a basket of
six major currencies, was up 0.2 percent at 72.191 .DXY.
The euro slipped 0.1 percent to $1.5841 <EUR=>, well off
its record high of $1.6037 set on Tuesday. The dollar was up
0.7 percent against the yen <JPY=> at 106.94 yen.
The euro was capped by European Central Bank President
Jean-Claude Trichet's comments published on Friday that
euro-zone growth is likely to be weak in the second and third
quarters before staging a recovery.
Risks to growth were on the downside, Trichet said in a
joint interview with four European newspapers.
"There's an emerging consensus of the euro's inability to
show any convincing gains above $1.5950 or $1.60," said Ashraf
Laidi, chief currency strategist at CMC Markets in New York.
"The euro is being set up for renewed weakness next week,"
he added, particularly if the Ifo survey survey shows further
business sentiment weakness in Germany, the euro zone's largest
Sterling edged down by 0.2 percent to $1.9973 <GBP=> on
speculation the UK government would increase borrowing. See
For the week, the euro has lost 0.7 percent against the
dollar, while the dollar rose 0.8 percent against the yen.
SENTIMENT STILL SHAKY
Despite the dollar's recovery on Friday, sentiment on the
currency was still shaky, analysts say.
The U.S. currency came under heavy pressure earlier this
week after turmoil as Fannie Mae and Freddie Mac heightened
concerns about the stability of the U.S. financial sector and
Federal Reserve Chairman Ben Bernanke said U.S. financial
markets and institutions remain under "considerable stress."
"We're getting lots of conflicting data. There seems to be
no real consensus regarding the outlook for the U.S. financial
sector or the U.S. economy as a whole," said Gareth Sylvester,
a senior currency strategist at HiFX in San Francisco.
"The market is trying to look at the positives...but each
time they think that this credit crunch and subprime debacle
has passed, something happens to bring that to the forefront
Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) said in a Securities and Exchange
Commission filing it expects to purchase mortgages with higher
unpaid principal balances and that realized credit losses will
Freddie Mac is still committed to raising $5.5 billion in
fresh capital through offerings including common and preferred
shares, but on Friday it said it has no immediate plans to
raise the funds.
(Additional reporting by Nick Olivari; Editing by Leslie
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