Tuesday December 2, 2008 - 22:05:09 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar, yen fall versus euro as stocks rebound
* Dollar, yen falls versus euro as equities rebound
* Stock markets end higher in choppy trade
* RBA slashes rates, ECB, BOE to cut later this week
* For up-to-the-minute market news, click on FXNEWS
(Updates prices, adds quotes, changes byline)
By Wanfeng Zhou
NEW YORK, Dec 2 (Reuters) - The U.S. dollar and the yen
fell against the euro on Tuesday as a stock market rebound
reduced demand for safe havens.
Shares on Wall Street rose sharply in the last hour of
trading after Monday's sell-off. The foreign-exchange market
has closely eyed equity performance for direction in recent
weeks, with rising stocks boosting risk appetite and hurting
demand for the U.S. and Japanese currencies.
Overall, moves in major currencies were modest, with
investors cautious ahead of monetary policy decisions from the
European Central Bank and the Bank of England later in the
week. Both are expected to slash rates aggressively to spur
"The market is in a little bit of a wait-and-see mode,"
said Stephen Malyon, senior currency strategist at Scotia
Capital in Toronto. "We have a lot of event risk later this
week with various central bank decisions and (U.S.) nonfarm
payrolls on Friday.
In late trading in New York, the euro rose 0.7 percent
against the dollar to $1.2714 <EUR=> and gained 0.9 percent
versus the yen to 118.66 <EURJPY=>.
The dollar <JPY=> was up 0.2 percent against the yen at
93.34. It fell as low as 92.64 yen earlier, the lowest since
Oct. 28, according to Reuters data.
The dollar and the yen have found support in recent months
as investors reduced exposure to riskier assets. U.S.-based
investors have also moved funds back to their domestic market,
further boosting the greenback.
Despite Tuesday's pullback, those factors are set to
continue to benefit the two currencies, analysts said.
"We're likely to remain in trading ranges with perhaps a
bit of a bias for further strength in both of those
currencies," Malyon said. "We're going to have a pretty nervous
financial market and news on the economy is likely to remain
quite downbeat. That's going to keep some pressure on
GLOBAL RATES IN FOCUS
An unexpectedly bold 100 basis-point rate cut from the
Reserve Bank of Australia kept the Australian dollar under
pressure early in the trading day, although the currency
recovered with the rise in stocks.
The Australian dollar rose 0.8 percent versus the greenback
to US$0.6451 <AUD=>.
The RBA's move raised expectations other central banks may
follow suit with aggressive easing in Britain and the euro zone
to revive their flagging economies. Such cuts could lend some
further support to the dollar by dimming the appeal of those
The European Central Bank is seen cutting rates on Thursday
by at least 50 basis points, from 3.25 percent, and possibly
Currency strategists at Citigroup cautioned that with
investors already discounting a sharp drop in euro zone rates,
the potential for disappointment is rising. The firm
recommended investors short euro positions going into the ECB
decision. A short position is a bet that prices will fall.
"The build-up of expectations for more aggressive action
may be contributing to the somewhat more positive tone from
'risky' assets and euro today, but this latest in a series of
spurts is no more sustainable than the last," the firm wrote in
a research note.
Sterling rose 0.2 percent to $1.4905 <GBP=> despite the
view that the Bank of England will slash rates by as much as
100 basis points on Thursday, one month after chopping them by
150 basis points, to 3.0 percent.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
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