Monday February 9, 2009 - 21:58:49 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar slips, investors look to US bank bailout
* U.S. financial stability plan to be outlined on Tuesday
* U.S. dollar slips, bank package uncertainty
* Euro hits nearly two-week high vs dollar
(Recasts, updates prices)
By Nick Olivari
NEW YORK, Feb 9 (Reuters) - The dollar slipped broadly on
Monday as investors focused on the expected positive impacts of
a U.S. bank bailout package on the global economy, weakening
some of the safe-haven bid for the U.S. currency.
Mostly ignoring a delay in the announcement of the plan,
investors boosted the higher-yielding Australian and New
Zealand dollars on rising risk appetite.
"One of the things that has been driving the dollar was
fear and lack of risk appetite," said Joseph Trevisani, chief
market analyst at FX Solutions in Saddle River, New Jersey. "So
if the financial bailout package gives people confidence the
financial system problems are behind us, they will be more
disposed to take foreign currency risk and that will lead away
from the dollar."
Late afternoon in New York, the euro was up 0.6 percent
percent at $1.3014 <EUR=>. It earlier rose to a high of
$1.3093, its strongest level since Jan. 29.
The dollar was down 0.6 percent against the yen at 91.46
<JPY=>, though well off a session low of 90.90. The euro was
little changed against the yen at 119.02 yen <EURJPY=>,
recovering from an earlier session low of around 117.07 yen but
failing to hold the session peak at 120.01 yen.
The Australian dollar rose 0.7 percent versus the greenback
to US$0.6803 <AUD=>, while the New Zealand currency surged 1.4
percent against the U.S. unit to US$0.5391 <NZD=>.
President Barack Obama's administration delayed
announcement of the bank rescue plan, which had been scheduled
for Monday, until Tuesday as the new administration pressed
lawmakers to settle their differences over a giant economic
stimulus plan in Congress.
A crucial procedural vote on the $827 billion stimulus
package by the Senate was expected later on Monday, with a
final vote on the legislation likely on Tuesday. That will set
the stage for fierce wrangling as negotiators try to reconcile
it with an $819 billion House of Representatives version passed
earlier without any Republican support. [ID:nN09513209].
Over the last few months the dollar has gained in the face
of bleak U.S. economic news, with investors buying the currency
on the view the U.S. government was the most aggressive among
industrialized nations in tackling the credit crisis. That
should help the U.S. economy emerge from recession quickly and
provide underlying support to the dollar, analysts and
To be sure, some investors were disconcerted by Monday's
delay in the announcement of the financial rescue plan. U.S.
Treasury officials were expected to brief congressional
committee staffers on the plan on Monday evening, with Treasury
Secretary Timothy Geithner, scheduled to outline it publicly at
11 a.m. (1600 GMT) on Tuesday.
They said the delay undermined the dollar because they
viewed the bailout package as specific to the United States and
any obstacle or evidence of political wrangling would be
negative for the U.S. economy and ultimately the dollar.
But analysts said most investors seemed to be looking past
the delay and anticipating the details of the bank rescue
package and the Senate's vote on the stimulus plan this week.
"Ultimately, that package is going to pass, and I think the
markets are anticipating a significant announcement and so the
tenor in the FX market is the unwinding of some risk-aversion,"
said Matthew Strauss, senior currency strategist at RBC capital
Markets in Toronto.
Sterling rose 0.7 percent to $1.4907 <GBP=> after UK bank
Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz) earlier booked a bigger-than-expected
annual profit of over 6 billion pounds and said credit market
losses were waning. The pound earlier hit a high of $1.4984, a
nearly one-month high, according to Reuters data.
With little on the economic calendar on Monday, market
focus stayed firmly on Congress, which divided along party
lines on the economic stimulus and bank bailout plans.
(Reporting by Nick Olivari and Gertrude Chavez-Dreyfuss;
Editing by Kenneth Barry)
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."