Monday February 9, 2009 - 11:29:53 GMT
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Reuters - www.reuters.com
FOREX NEWS-Yen gains as US delays bank plan announcement
* Yen gains on disappointment at US bank bailout plan delay
* Dollar erases gains vs euro, stg; Barclays results cheered
* Focus on US financial stability plan to be outlined Tues
(Adds quotes, updates prices)
By Jessica Mortimer
LONDON, Feb 9 (Reuters) - The yen gained broadly on Monday
as a delay in the announcement of the U.S. bank bailout package
knocked market sentiment and benefited assets which are
perceived to be low-risk.
The dollar, however, erased earlier gains against the pound
and the euro as investors welcomed news Barclays Bank had
booked a bigger-than-expected annual profit of over 6 billion
pounds and said credit market losses were waning. [ID:nL9169904]
On a quiet day for news, investors nevertheless remained
cautious, keeping European stocks in the red and propping up the
Investors were jittery after the Obama administration on
Sunday pushed back the announcement of the bank rescue plan
until Tuesday as it pressed lawmakers to settle their
differences over the economic stimulus plan. [ID:nN08495108]
The announcement had originally been scheduled for Monday,
but the Senate will be spending Monday focusing on the stimulus
package ahead of a vote on Tuesday.
"There remains a risk that Obama might not pull through the
package or that he might have to make significant changes," Bank
of Scotland Treasury Services currency analyst Naeem Wahid said.
At 1101 GMT, the dollar was down 0.5 percent against the yen
<JPY=> to 91.50, while the euro was off 0.5 percent to 118.45
yen <EURJPY=>. Both were above earlier session lows of around
90.90 and 117.07 yen respectively.
Against the dollar, the euro was up 0.1 percent to $1.2943
<EUR=>, while the pound rose 0.4 percent to $1.4859 <GBP=> after
both began the day in negative territory.
Bank of Scotland's Wahid said there is a general sense in
the market that recently the pound has been oversold and the yen
"The world hasn't really changed since last week, but there
is a feeling that cable (sterling/dollar) and dollar/yen are the
most oversold pairs," he said.
US MEASURES EYED
With little on the economic calendar for the time being,
market focus is centred on the prospect of the U.S. agreeing a
huge economic stimulus package and a keenly awaited bank bailout
Grim U.S. data on Friday which showed the U.S. economy lost
nearly 600,000 jobs last month unusually bolstered riskier
assets, including currencies such as the euro and the pound, as
investors hoped this would speed the passing of the package.
This took the dollar to a one-month high against the yen,
but investors were dealt a blow by news of the delay to the
The U.S. financial stability plan is due to be outlined by
Treasury Secretary Timothy Geithner at 1600 GMT on Tuesday after
a Senate vote on the economic stimulus package.
Analysts noted there could be scope for riskier assets to
resume their gains once the U.S. fiscal stimulus and bank rescue
deals are announced.
"The plans are likely to be quite bold and there is scope
for a bear market rally in risky assets," BTM-UFJ currency
economist Lee Hardman said.
Meanwhile, investors continued to be reminded of the grave
situation facing the world's economies.
Figures released Monday showed German exports fell sharply
in December after a record decline the previous month
Figures out of Japan showed the country's current account
surplus fell 92.1 percent in December from a year earlier, while
corporate bankruptcies soared in January [ID:nT103660].
(Reporting by Jessica Mortimer; editing by Chris Pizzey)
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