Thursday September 11, 2008 - 21:07:27 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-US dollar rises to 1-year peak, yen surges broadly
* Dollar touches one-year high, euro hits year low
* Yen surges across the board
* U.S. investors liquidating assets in emerging markets
(Adds details, updates prices, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 11 (Reuters) - The U.S. dollar climbed to
fresh one-year peaks against the euro and a major currency
basket on Thursday, as nervous investors sought refuge in the
greenback's safety amid escalating global slowdown fears.
The low-yielding Japanese yen also benefited from a surge
in risk aversion, pushing the euro and the Australian and New
Zealand dollars to their lowest in at least two years.
Investors had used the yen in carry trades to purchase
high-yielding currencies in times when global growth was
accelerating and risk appetite was high.
Analysts said the uncertain global economic outlook was
prompting U.S. investors to liquidate assets in emerging
markets, where inflation was also becoming a problem.
"This is a continuation of the strong dollar trend that we
have been seeing for the last couple of weeks and it seems a
lot of people have been coming back into the U.S. market," said
Win Thin, senior currency strategist at Brown Brothers Harriman
in New York.
"This trend should intensify as more and more money
managers get back to the U.S. The U.S. economic outlook is not
that great, but I think markets accept the fact that it is
poised to come out of this global slowdown first," he added.
The U.S. dollar index on the ICE Futures Exchange, which
measures the greenback's value against a basket of six
currencies, rose to 80.375 .DXY, the highest since September
last year, according to Reuters data. By late afternoon
trading, the index was up 0.2 percent at 80.175.
The euro tumbled to $1.3882 <EUR=>, its lowest since
September 2007. It was last trading around $1.3945, down 0.3
percent, losing 5.3 percent so far on the month.
The euro's woes were also worsened by comments from
Jean-Claude Juncker, chairman of euro zone finance ministers,
saying the currency was still overvalued in real terms.
Separately European Central Bank Governing Council member
Nout Wellink said a technical recession in the euro zone could
not be ruled out, further souring the mood toward the euro.
Aside from the dollar, the yen has been the best performing
currency over the past month among developed currencies, with
much of its gains coming on the crosses, notably against the
high-yielders such as the Australian and New Zealand dollars.
Even against a strong U.S. dollar, the yen has gained ground.
On Thursday, the dollar dropped 0.6 percent to 106.93 yen
<JPY=>, weighed down by a combination of weaker global stocks
and data showing the U.S. trade gap expanded to $62.2 billion,
its widest since March 2007.
The dollar popped up briefly versus the yen in the late
afternoon after the Wall Street Journal reported that troubled
investment bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) was actively
negotiating with potential buyers including Bank of America
(BAC.N: Quote, Profile, Research, Stock Buzz).
The yen has been the only currency so far that the dollar
has not been able to conquer, with the greenback down 1.5
percent on the month so far.
The euro <EURJPY=> fell to 147.51 yen, its lowest since
late August 2006, according to Reuters data. It was last at
149.12 yen, down 0.9 percent.
The recent rise in risk aversion, decline in equity
markets, and fall in bond yields have certainly played in the
Analysts at BNP Paribas said part of the yen's rise has
also been due to the unwinding of positions in Asian
currencies. Investors have also used the yen extensively as a
funding currency for buying high-yielding Asian units.
But with many Asian currencies coming under pressure, the
unwinding process is likely to continue in the near term.
"We expect the yen to remain supported and even extend
gains on many of the crosses -- especially against the higher
yielders and Asian currencies where central banks have been
reluctant to take action against increasing inflation," said
BNP Paribas in a research note.
The yen fell to more than two-year lows against both the
Australian <AUDJPY=> and New Zealand dollars <NZDJPY=> to 84.10
yen and 68.56, respectively.
(Additional reporting by Lucia Mutikani; Editing by James
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."