Tuesday February 24, 2009 - 11:31:18 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar hits 3-month high as yen falls broadly
* Dollar hits 3-month high against broadly weaker yen
* Dollar up 1.1 pct at 95.54 yen <JPY=>
* Euro rises to 7-week high vs yen <EURJPY=>
* German Ifo falls slightly; eyes on U.S. banks, Bernanke
(Adds quotes, updates prices)
By Tamawa Desai
LONDON, Feb 24 (Reuters) - The dollar hit a three-month high
against a broadly weaker yen on Tuesday as investors continued
to sell the Japanese currency on concerns over its ailing
The recent correlation between the yen gaining as a
perceived safety bid when stock markets tumble has broken down,
and worries about Japan's sharp economic downturn and a lack of
convincing policy steps eroded confidence.
"A lot of the historical relationships seem to be breaking
down for some of the yen crosses," said Adam Cole, global head
of forex strategy at RBC Capital Markets.
"The yen no longer seems to be trading as a safe haven," he
said, but added he was sceptical how long this would hold given
it was not unprecedented for the yen correlation to break down.
By 1029 GMT, the dollar was up 1.1 percent at 95.54 yen,
near a three-month high of 95.70 yen <JPY=>.
The euro climbed to a seven-week high of 122.39 yen
<EURJPY=>. Sterling rose 1.5 percent to 138.99 yen <GBPJPY=>
while the Australian dollar <AUDJPY=> gained 2.0 percent to
Finance Minister Kaoru Yosano said the government was
looking at stock buying and other methods to support the share
market. [ID:nT359930] The Nikkei average .N225 fell 1.5
percent to a four-month closing low on Tuesday.
Meanwhile, the euro was buoyed against the dollar as the
single currency gained against the yen.
U.S. stock futures SPc1 pointed to a higher open, which
may also have prompted investors to sell the perceived safety of
the dollar and buy the single currency, some analysts said.
The Dow Jones industrial average .DJI fell to an 11-year
low on Monday as the latest steps by the U.S. government to aid
its banks and housing sector failed to impress investors.
The euro was up 0.8 percent at $1.2818 <EUR=>, but still
below a 12-day peak of $1.2992 hit on EBS the previous day.
There was little incentive to actively chase the euro
higher, analysts said.
"There is too much uncertainty here and we definitely don't
think the jitters regarding emerging markets has come to an end
and that will continue to weigh on the euro," said Arne Lohmann
Rasmussen, head of forex at Danske Markets in Copenhagen.
Markets shrugged off Germany's Ifo business climate
indicator, which fell to 82.6 in February. That was slightly
lower than forecasts for it to stay at January's level of 83.0.
The Ifo current conditions indicator worsened to 84.3, also
slightly below expectations for 85.0. [ID:nBAE001605]
Euro zone industrial new orders fell by 5.2 percent
month-on-month in December, in line with forecasts for a 5.0
Traders will keep an eye on developments in the U.S. banking
sector after a report on Monday the government could take a
stake of up to 40 percent in Citigroup, and with American
International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz) possibly seeking more aid
despite the billions of dollars already committed to it.
U.S. Federal Reserve Chairman Ben Bernanke is set to deliver
his semi-annual testimony to Congress later in the day, as he
seeks to offer assurance for the troubled economy.
(Additional reporting by Farah Master)
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