Thursday April 2, 2009 - 10:39:36 GMT
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Reuters - www.reuters.com
FOREX NEWS-Yen, dollar retreat as shares rise; ECB eyed
* Yen, dollar index slip as risk tolerance rises .DXY
* Dollar/yen at 5 month high approaching 100 mark <JPY=>
* ECB eyed for signs of unconventional easing
* G20 leaders craft crisis response
* Swissie falls after Hildebrand FX comments
(adds quotes, updates prices)
By Veronica Brown
LONDON, April 2 (Reuters) - The dollar fell broadly in
tandem with the yen on Thursday as global stock markets rallied
-- buoyed as some pieces of positive economic data kindled hope
that the deep global recession might be moderating.
Investors closely tracking the meeting of G20 leaders in
London, were also looking for confirmation that governments will
take more action to shore up the ailing financial system, which
would boost investor appetite.
"With the G20 meeting...the emphasis has gone from wondering
about fiscal stimulus to the role of the International Monetary
Fund. It seems likely that the IMF's financial resources can be
boosted substantially," said Robert Minikin, FX strategist at
Standard Chartered in London.
Global stocks as measured by MSCI's all-country index were
up 2.1 percent after U.S. factory and home sales data released
the previous day spurred optimism about the economy, even though
other numbers showed job losses mounting. [ID:nN01407201]
Sterling shot higher against the dollar and euro after
housing figures showed the first rise in British prices since
October 2007 [ID:nLAG003359].
"Risk appetite has been picking up with the U.S. data. You
could even argue about the UK housing price data moving in the
same direction and giving a bit of reason for optimism," said
Michael Klawitter, FX strategist at Dresdner Kleinwort in
The euro's rise came even as markets waited for a European
Central Bank policy decision at 1145 GMT. ECB President
Jean-Claude Trichet will answer questions at 1230 GMT. [ECB/INT]
The single currency bloc's central bank is seen cutting
interest rates to a record low of 1 percent, leaving focus on
what the central bank might say on unconventional easing.
Participants are keen to see if the ECB will follow the
U.S., British, and Japanese central banks in buying corporate or
government debt to boost money supply in a policy known as
quantitative easing, though many doubt it is ready take that
By 1000 GMT, the dollar index, a gauge of the greenback's
strength against a basket of key currencies, dropped 0.2 percent
to 85.301 .DXY.
But broad yen weakness pushed the dollar to a five month
high at 99.78 yen <JPY=>. The euro rose 1.5 percent to 132.43
The euro was up 0.5 percent at $1.3299 <EUR=>, but still not
far away from Monday's two-week low near $1.3100 and chart
support at its 100-day moving average of $1.3137.
SWISSIE SHOT DOWN
Sterling rose 1.2 percent to $1.4633 <GBP=>, while the euro
fell 0.6 percent, dipping below 91 pence <EURGBP=>. Higher
tolerance of risk also took the Australian dollar up 1.1 percent
to $0.7065 <AUD=>.
But the Swiss franc fell versus the euro after Swiss
National Bank Vice-President Philipp Hildebrand said the bank
would use all means to prevent a further appreciation of the
Swiss franc. [ID:nZAT008216].
The euro hit a session high of 1.5263 francs <EURCHF=>. The
SNB had stunned markets by buying foreign currency and bold
monetary policy measures on March 12.
Investors were keeping a close eye on possible steps for the
global economy from a Group of 20 meeting on Thursday.
A communique drafted for the meeting, obtained by Reuters,
said leaders would submit large hedge funds to supervision for
the first time and enhance regulation through a new agency and a
beefed-up International Monetary Fund. [ID:nL2438948]
However, there was still debate over enhanced funding for
the IMF to tackle crises in emerging economies, precisely how to
police tax havens and the amount of money to boost trade.
(Reporting by Veronica Brown; Editing by Chris Pizzey)
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