Wednesday March 4, 2009 - 21:16:49 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar climbs vs yen, buoyed by China optimism
* Dollar hits 4-month high vs yen
* U.S. stocks up, euro rallies from 3-month low vs dollar
* Plans for more Chinese spending boost risk appetite
* U.S. private employers shed 697,00 jobs in February
(Updates prices, adds quotes)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 4 (Reuters) - The U.S. dollar scaled
four-month peaks against the yen on Wednesday, as news about
China's latest stimulus package and data suggesting its economy
is beginning to recover rekindled investors' risk appetite.
The news fueled a rally on Wall Street, lifting it from
12-year lows hit and prompted selling in the greenback versus
the euro and other higher-yielding currencies such as the
Australian and New Zealand dollars.
"The biggest news today came out of China and that seems to
have a bigger impact on risk appetite than market activity,"
said Robert Blake, senior currency strategist, at State Street
Global Markets in Boston.
"The news of the stimulus package is supporting riskier
currencies and generating an unwind in the safe-havens that is
now more or less limited to the dollar," he added.
China on Wednesday said it would increase infrastructure
and manufacturing spending, raising hopes of stimulus for the
global economy. In addition, an important measure of Chinese
manufacturing improved in February for a third straight month.
For news on China, click on [ID:nSP488798].
The report on China overshadowed data showing another slide
in U.S. private sector employment for February. For more see
In late New York trading, the dollar rose to 99.06 yen
<JPY=>, up 0.8 percent on the day. Earlier, it climbed to 99.49
yen, the highest level since Nov. 5, according to electronic
trading platform EBS.
The yen was also weighed down by concerns about Japan's
economy, which is mired in recession. That along with zero
interest yields have spurred an outflow of funds from Japanese
Bank of Japan board member Miyako Suda echoed those worries
on Wednesday, saying it was difficult to judge whether the
Japanese economy had hit bottom and voiced concerns over
tumbling share prices.
UNCHANGED GLOBAL BACKDROP
The euro was trading at $1.2644 <EUR=>, up 0.6 percent on
the day after earlier hitting a three-month trough below $1.25.
Sterling rose 0.8 percent to $1.4171 <GBP=> .
The global backdrop, though, hasn't changed, with financial
markets still in turmoil, credit markets remaining tight and
economies around the world still far from recovery.
"We believe the underlying risk aversion theme is alive and
well," said Andrew Wilkinson, senior market analyst, at
Interactive Brokers in Greenwich, Connecticut.
"With a push below $1.25 against the euro and the rise to
within a hair's breadth of C$1.30 against the Canadian dollar,
it's hard to blame traders from taking profits and making
short-term bets against the greenback ahead of Friday's
Anxiety about the U.S. and world economies has supported
the dollar in recent months as investors cut exposure to stocks
and other currencies and sought safety in the greenback, which
benefits from its role as the world's reserve currency.
The Australian dollar, meanwhile, rallied, despite data
showing Australia's economy shrank in the fourth quarter for
the first time in eight years. The Aussie dollar rose to
US$0.6503 <AUD=>, up 1.8 percent.
Its New Zealand counterpart also posted sharp gains to
US$0.5055 <NZD=>, up 2.2 percent from late Tuesday.
Analysts said the focus now shifts to Thursday's monetary
policy decisions, with the Bank of England and European Central
Bank expected to cut borrowing costs by half a percentage point
to record lows.
The ECB in particular will be watched for any indication it
is considering adopting unconventional measures beyond simple
rate cuts to boost money supply and growth.
If that happens, look for renewed euro selling, said
Michael Woolfolk, senior currency strategist at Bank of New
York-Mellon. "The market would take that to mean the ECB knows
something it doesn't, and that's not encouraging."
(Additional reporting by Steven C. Johnson; editing by Kenneth
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."