Tuesday December 9, 2008 - 21:18:55 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar, yen gain as investors run away from risk
* Dollar, yen up as stocks wobble, investors seek safety
* German ZEW sentiment beats forecast but conditions weak
* T-bill rates at zero as deflation fears weigh
* Risk demand still low, Japan growth contracts
* For up-to-the-minute market news, click on FXNEWS
(Recasts; updates prices, adds quotes, changes byline)
By Steven C. Johnson
NEW YORK, Dec 9 (Reuters) - The dollar rose against most
major currencies on Tuesday as more weak global economic data
renewed fears of a worsening crisis, snuffing out a Wall Street
rally and prompting safe-haven flows into the greenback.
The yen also rose broadly as investors sold holdings of
risky assets that were financed by borrowing the Japanese
currency at low interest rates. Yields on U.S. government debt
fell toward five-decade lows.
Fear was so pronounced that the U.S. Treasury sold $30
billion in four week bills on Tuesday at a high rate of 0
percent, meaning investors were willing to hand over cash to
the government and receive no interest payments in return. For
details, see [ID:nN09269298]
"Economic data around the globe is extremely weak.
Investors are very risk averse. They're just not willing to
jump into stocks," turning instead to Treasuries and the
dollar, said Matt Esteve, foreign exchange trader at Tempus
Consulting in Washington.
The euro fell 0.9 percent to 119.03 yen <EURJPY=> and 0.1
percent to $1.2922 <EUR=>, weighed down partly by a ZEW survey
showing German economic sentiment for December remaining stuck
near historically low levels although it did rise
The dollar shed 0.8 percent to 92.11 yen <JPY=>, just above
a session trough of 91.94 yen, according to Reuters data.
Uniformly grim UK economic data also put the British pound
under pressure and economists pointed to further cuts in Bank
of England interest rates. [ID:nL9702067]. Sterling was last
down 1.1 percent at $1.4745 <GBP=>.
"The ZEW is not going to do the euro any favors," said Ron
Simpson, director of FX research at Action Economics in Tampa,
Florida. "And incoming UK data is poor at best, putting the
pound under pressure."
Demand for risk was generally low after figures earlier on
Tuesday showed the Japanese economy contracted 0.5 percent in
July-September, far more than an initial reading of a 0.1
percent decrease [ID:nT356356].
Investors were also wary of taking on risk as they awaited
a U.S. emergency loan package for its top three automakers,
while figures late last week showed that the U.S. lost more
than half a million jobs in November alone [ID:nN08534770].
"The harsh reality of global weakness is still coming
through in markets," said Stephen Koukoulas, strategist at TD
Securities in London.
Rapidly faltering economies have led central banks to slash
interest rates aggressively. The Bank of Canada was the latest
to act, dropping borrowing costs to 1.5 percent, a 50 year low,
on Tuesday and declaring the Canadian economy in recession
The U.S. dollar rose 0.8 percent against its Canadian
counterpart to C$1.2646 <CAD=> after earlier touching a session
peak of C$1.2743.
(Additional reporting by Nick Olivari; Editing by Chizu
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