Monday November 24, 2008 - 12:18:52 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dlr falls, yen gives up gains as mkts cheer Citi
* Dollar, yen falter as risk aversion cools
* Investors take cue from rallying stock mkts on Citi plan
* Real economy picture remains weak
* German Ifo underlines struggling euro zone economy
(releads, adds quotes, updates prices, changes byline)
By Veronica Brown
LONDON, Nov 24 (Reuters) - The dollar and yen gave up broad
early gains on Monday as investors eased back from risk averse
positions, taking a cue from stock market cheer after the U.S.
government rode to the rescue of banking giant Citigroup (C.N: Quote, Profile, Research, Stock Buzz).
The low-yielding yen, which has been a major beneficiary
from the unwinding of riskier investments, had initially pushed
higher when news of the bailout for Citi first surfaced,
sceptical of its impact on the financial crisis.
But while investors remain broadly risk averse due to
ongoing concerns about a global recession, they were willing to
pause for breath and applaud the U.S. government's $300
billion-plus lifeline to prevent the collapse of the world's
largest banking group [ID:nSP406175].
European stocks rose roughly 4 percent to 791.57 ,
while U.S. stock market futures SPc1 DJc1 NDc1 were all
pointing to a positive Wall Street open.
"Looking back on it, I think the market is concluding that
maybe it was the wrong thing to let Lehman fail," said Chris
Turner, head of FX strategy at ING in London.
"So maybe this (Citi package) is the new model for how you
handle the systemically-important banks in the States," he
By 1143 GMT, the euro was up 0.9 percent on the day versus
the dollar at $1.2691 <EUR=>, while it also rose 0.3 percent to
121.02 yen <EURJPY=>.
Reflecting broad pressure on the dollar, the U.S. unit
slipped 0.5 percent to 95.34 yen <JPY=>, while sterling followed
the rallying direction of UK share prices and rose 0.7 percent
to $1.5000 <GBP=>.
Some traders said dollar/yen losses were limited by news
that U.S. President-Elect Barack Obama will nominate New York
Federal Reserve Bank President Timothy Geithner and former
Treasury Secretary Lawrence Summers as his top economic
REAL ECONOMY CLOUDS
The euro briefly dipped to session lows earlier in the
session after a below-consensus reading for the German business
climate gave investors an economic reality check, underlining
weakness in the German economy and keeping expectations high for
cuts in euro zone interest rates [ID: nBEB002256].
The Munich-based Ifo economic research institute said that
its business climate index declined to 85.8 in November from
90.2 in October, hitting its lowest since February 1993. The
reading was weaker than forecasts of a 88.7 reading.
"(The reading) was truly awful and suggests that the fall in
output in the euro zone's largest economy gained both momentum
and traction in the fourth quarter," said Tom Vosa, head of
market economics at nabCapital in London.
"The sharp slowdown seen in Germany and elsewhere will put
pressure on the ECB to cut rates aggressively," he said, adding
that the ECB may cut rates by 75 or even 100 basis points from
3.25 percent next month.
In Britain, Prime Minister Gordon Brown and his finance
minister, Alistair Darling, are expected to announce a package
totalling up to 20 billion pounds ($30 billion), by cutting
sales tax and offering help for businesses, low earners and
struggling home owners. [ID:nL0672267]
The British economy will shrink by 1.5 percent next year,
and for a total six quarters in a row, according to a forecast
from the National Institute of Social and Economic Research.
(Additional reporting by Naomi Tajitsu in London)
(Reporting by Veronica Brown; Editing by Tony Austin)
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."