Monday July 21, 2008 - 09:19:12 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dlr steadies off record low, financials in focus
* Euro up 0.1 percent at $1.5865 <EUR=>
* Investors watching U.S. earnings, oil price
* Sentiment on U.S. financials remains cautious
(Changes dateline, byline, updates prices, adds quotes)
By Toni Vorobyova
LONDON, July 21 (Reuters) - The dollar steadied nearly two
cents away from record lows versus the euro on Monday with
sentiment hinged on the strength of U.S. banks' earnings and the
reception of a rescue plan for Fannie Mae and Freddie Mac.
Confidence in the U.S. financial sector, hard-hit by the
nearly one-year old credit crunch, was also boosted late last
week after results from Citi (C.N: Quote, Profile, Research, Stock Buzz), JPMorgan Chase (JPM.N: Quote, Profile, Research, Stock Buzz) and
Wells Fargo (WFC.N: Quote, Profile, Research, Stock Buzz) beat low expectations.
But a flurry of earnings due this week -- including Bank of
America on Monday and Wachovia (WB.N: Quote, Profile, Research, Stock Buzz) on Tuesday -- kept
investors on edge.
Treasury Secretary Henry Paulson said on Sunday he was
optimistic Congress would approve the government's request for
authority to shore up the two troubled mortgage giants, Freddie
"The question is will there be some disappointment in
respect to the rescue package or not. If not, that should be
dollar supportive," said Michael Klawitter, currency strategist
at Dresdner Kleinwort in Frankfurt.
"$1.60 still seems to be the top for euro/dollar and a break
above that level really needs a clear loss in confidence in the
U.S. financial system in general," he added.
The euro edged up 0.1 percent to $1.5865 <EUR=> by 0728 GMT.
Despite setting a record high of $1.6038 last Tuesday, the
euro staged its worst weekly performance in a month last week
thanks to the U.S. bank results. It's still up nearly 9 percent
for the year-to-date though.
Ongoing risk appetite jitters translated into an early
morning slide in European stocks , while the
low-yielding yen pushed higher against the dollar.
The dollar fell 0.3 percent to 106.64 yen <JPY=>, while the
euro eased 0.2 percent to 169.17 yen <EURJPY=>.
The worst performer among the majors was sterling, which
lost around a third of a percent versus both the euro <EURGBP=>
and the dollar <GBP=> after Bank of England policymaker David
Blanchflower was quoted as saying the economy is heading into a
Blanchflower was the lone voice calling for a cut in rates at
the central bank's May and June meetings.
The dollar had also been supported last week by a sharp
pullback in oil prices, which were down $18 from their highs at
Yet, oil prices CLc1 gained $1.20 cents to $130.11 a
barrel on Monday after talks over Iran's nuclear ambitions
failed to reach a conclusion [O/R].
"The oil price continues to be the main risk for further
considerable dollar gains in case the correction, which started
last week, resumes," Commerzbank Corporates & Markets said in a
Looking ahead, traders were awaiting a speech from
Philadelphia Fed Chief Charles Plosser on Tuesday, while New York
Fed President Timothy Geithner and SEC Chairman Christopher Cox
are set to testify before a House Financial Services Committee
hearing on regulation on Thursday.
The Fed releases its Beige Book summary of the economy on
Wednesday where it will have to balance weakness in the housing
market and the squeeze in credit markets against rising
Key U.S. data includes June existing home sales on Thursday
and new home sales on Friday, releases which BNP Paribas
described as "the big test for U.S. markets".
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