Thursday September 25, 2008 - 11:47:55 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar falls as market awaits US bailout approval
* Dollar down 0.3 pct versus basket of currencies .DXY
* US bailout plan nears approval but uncertainty remains
* Euro zone worries swept aside but recession looms
(Updates prices, adds quotes, changes byline)
By Jessica Mortimer
LONDON, Sept 25 (Reuters) - The dollar fell against a basket
of currencies on Thursday as investors continued to fret about
whether political wrangling will delay approval of the $700
billion U.S. package to mop up bad bank debt.
After two days of congressional testimonies, U.S. lawmakers
are inching towards approving the deal designed to help rescue
the beleaguered U.S. financial system. See [nLP616843]
Worries remain, however, about how successful the deal will
be in tackling the current crisis, while major concerns persist
about the substantial impact on U.S. government finances.
"In general the market tendency is to believe that the
bailout deal will get through, albeit probably in a reduced
form," UBS currency analyst Geoffrey Yu said.
"The market is in a wait and see attitude. No fresh risk is
being taken on and investors are staying away from the dollar,
but if the bailout goes through then they may increase risk a
bit," he said.
At 1106 GMT, the euro was up 0.4 percent against the dollar
<EUR=> at $1.4666, while the dollar fell 0.3 percent against a
basket of currencies to 76.769 .DXY.
President George W. Bush will meet Republican and Democratic
leaders at 1955 GMT to hammer out the details of the rescue
plan, the White House said.
On Wednesday, in an attempt to garner public support for the
package, Bush warned the United States was in the middle of a
serious financial crisis that could push the economy into
recession if the government did not act, but he offered few
details about the makeup of the emerging deal. [ID:nN24444366].
European stock markets rose on hopes the U.S. deal
would go through fairly soon, but later pared gains on an
outlook warning from General Electric (GE.N: Quote, Profile, Research, Stock Buzz).
Heightened risk aversion was reflected via a well-bid yen
<JPY=>, while jammed money markets showed no sign of letting up.
The interbank cost of borrowing three month dollars, euros
and sterling rose further, according to the British Bankers
Association's latest daily fixing [nLP648832].
"Money markets show no sign of easing up any time soon and
this is filtering through, with investors going into yen, Swiss
francs and gold," Yu at UBS said.
ECONOMIC FUNDAMENTALS IGNORED
The market's focus remains firmly on the U.S. rescue deal,
leaving economic fundamentals to the side, even as the euro zone
economy looks to be sliding quickly into recession.
The latest GfK consumer sentiment indicator for Germany
Thursday unexpectedly showed some improvement, but the figures
provided scant comfort after Wednesday's closely-watched German
Ifo survey for September slumped sharply.
The GfK market research group also warned that the latest
bout of financial market turmoil has "significantly" increased
the risk of recession. See [ID:nLO270875].
"Let's not forget the euro zone is moving into recession, it
is a very severe situation we're currently facing here," said
Michael Klawitter, currency strategist at Dresdner Kleinwort in
Against the yen, the dollar slipped 0.3 percent to 106.26
yen <JPY=>, despite Japanese data earlier showing the country's
trade balance swung into deficit in August for the first time
since January as exports slowed and import costs rose.
The euro was little changed versus the yen at 155.34 yen
Later in the session, U.S. durable goods data, new home
sales and weekly jobless claims will be closely watched.
(Reporting by Jessica Mortimer; Editing by Ron Askew)
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."