Friday December 19, 2008 - 12:19:50 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Euro falls broadly, dollar stays weak vs yen
* Euro falls broadly, traders take profits on steep rally
* Dollar stays weak vs yen on grim US economic view
* Limited FX impact from BOJ rate cut to 0.1 percent
(Adds comments, updates prices)
By Tamawa Desai
LONDON, Dec 19 (Reuters) - The euro fell broadly on Friday,
as traders locked in profits from the currency's rally to a 2
1/2-month high against the dollar and its strongest level ever
against sterling this week.
The dollar fell closer to a 13-year low against the yen,
reversing brief gains made after the Bank of Japan cut interest
rates, as a dismal U.S. economic outlook continued to sting the
The euro fell below $1.40 for the first time since
Wednesday, as traders reckoned that its broad surge this week
may have been overdone. The single currency is on track to post
a weekly gain of roughly 5 percent against the dollar, one of
its biggest since the euro was launched in 1999.
"There have been year-end related flows in the past couple
of weeks (pushing up the euro) and such flows seem to be
subsiding a bit," said Ian Stannard, strategist at BNP Paribas.
That prompted traders to take profits as they were adverse
to holding risk in illiquid year-end market conditions.
By 1150 GMT, the euro <EUR=> was down almost 2.0 percent at
$1.4009 after hitting a low of $1.3987, according to Reuters
data, dropping more than 3 cents from a session high.
"We've seen a lot of volatility in the market in the past
few days so people are in some sense keeping risk light and
taking positions which are shorter-term," said Phyllis
Papadavid, currency strategist at Societe Generale in London.
The single currency has retreated from $1.4720 touched on
electronic trading platform EBS on Thursday, its strongest since
Some in the market said that euro losses were also part of a
delayed reaction to the European Central Bank's move on Thursday
to cut the return it gives banks for holding cash at the ECB and
prod interbank money markets back to normality [ID:nLI302388].
The single currency also fell 2.5 percent to 124.40 yen
<EURJPY=R>, down from 131.03 yen hit on Thursday, its highest in
nearly two months.
Against sterling <EURGBP=>, it fell 1.7 percent to 93.24
pence, retreating from a record high of 95.56 pence hit
according to Reuters data on Thursday.
The dollar <JPY=> fell 0.4 percent to 89.04 yen, sliding
within range of 87.13 yen reached on electronic trading platform
EBS earlier in the week, for the first time since mid-1995.
The yen was broadly supported as ongoing concerns about the
global economy prompted more investors to dump risky positions
including carry trades, where the low-yielding Japanese currency
in past years was used to buy assets in higher-yielding
The BOJ's decision to cut rates to 0.1 percent on Friday had
provided a brief boost to the dollar as the monetary easing took
the policy target rates of Japan and the U.S. to more or less
But the dollar quickly reversed those gains as the BOJ's
move to put more funds into the market to ease the credit crunch
was seen as positive for Japan's economy, boosting the yen.
In addition, the possibility of a delay by the U.S.
government on whether to bail out the country's ailing
automakers and a fall in oil prices to their lowest in more than
four years kept the U.S. currency under selling pressure.
Bridge loans to carry the companies for several months could
be announced as early as Friday, according sources not
authorised to publically discuss negotiations on the issue
The possibility that the firms could fail could have a deep,
negative impact on the wider economy stung the dollar, while a
fall in oil prices to their lowest in more than four years also
illustrated shrinking demand as a global recession takes hold.
"The automakers' issue is a problem for the entire U.S.
economy ... and the fall in oil prices is part of a global
economic story because of demand issues, and that's dragging on
the dollar," said James Hughes, markets analyst at CMC Markets
(Additional reporting by Naomi Tajitsul; Editing by Andy Bruce)
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."