Monday November 17, 2008 - 22:08:40 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar falls vs yen on global recession fears
* Yen rises, US manufacturing drop adds to recession woes
* G20 meeting seen long on rhetoric, short on specifics
* Risk aversion still intact as stocks slide
* Japan in recession; survey shows US in recession as well
(Adds comment, updates prices, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 17 (Reuters) - The dollar fell against the
Japanese yen on Monday, as weak U.S. manufacturing data
deepened worries about the global economy, and investors
fretted that leaders worldwide ended a weekend meeting with few
concrete proposals for dealing with this year's downturn.
The greenback slipped versus the euro in a choppy session,
but was off its lows for the day, as risk aversion remained
elevated on news Japan's economy slid into recession in the
third quarter, joining that of the 15-country euro zone.
Further weighing on the market was a report showing the New
York Federal Reserve's gauge of manufacturing in the region
fell to a record low [ID:nN17448701] and news Citigroup (C.N: Quote, Profile, Research, Stock Buzz)
intends to slash up to 50,000 jobs [ID:nN17468336], or 15
percent of its work force. That depressed Wall Street, with
major indexes falling more than 2 percent.
"There is still uncertainty about the outlook for the
global economy," said Samarjit Shankar, director of global
strategy, at Bank of New York Mellon in Boston.
"We're still very much in an environment of risk aversion
and people are squaring positions a little bit. Overall, there
is still a lot of gloom about the equity markets."
Typically, the dollar rises against a broad range of
currencies and the yen gains as well when risk appetite is low
because investors seek refuge in U.S. Treasuries and unwind
trades financed with the cheaply borrowed yen.
In late trading, the euro was up 0.1 percent at
$1.2645<EUR=> but down 0.9 percent versus the yen at 121.85
The dollar fell 0.6 percent to 96.36 yen <JPY=>.
In Washington over the weekend, leaders of the Group of 20
countries drafted steps to rescue the world economy from its
worst crisis in 80 years but left it to individual governments
to tailor their responses to their own circumstances and
"Expectations for the G20 were low going in, but I do think
the market was a little disappointed that we didn't get any
concrete steps or coordinated plan out of it," said Omer
Esiner, senior market analyst at Ruesch International in
Bank of New York's Shankar added that the market needs
"more than verbal assurances from policymakers" to fight the
Data showing industrial production rose 1.3 percent in
October, after a downwardly revised September drop of 3.7
percent -- the biggest fall in more than 62 years -- did little
to ease worries about the world's largest economy.
The bounce in production has been attributed to a
post-hurricane rebound and analysts say this was not a sign
that downward pressure on the U.S. economy was easing.
In fact, the Philadelphia Federal Reserve's latest Survey
of Professional Forecasters said the U.S. economy dipped into a
recession last spring and will contract sharply this quarter,
adding to the overall bleak scenario. See [ID:nN17502311].
In other currencies, sterling soared 1.7 percent to $1.4997
<GBP=>, though dealers said that was driven by investors taking
profits after the pound's fall last week to 6-1/2 year lows.
Traders and analysts remained skeptical on the British
currency given signs of worsening UK economic conditions.
The Confederation of British Industry said Monday the UK
economy in 2009 will suffer its sharpest contraction in almost
two decades and unemployment could approach 3 million by 2010.
(Additional reporting by Steven C. Johnson; Editing by Diane
Craft) (([email protected]; +1 646 223 6322;
Reuters Messaging: [email protected]))
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