Tuesday April 7, 2009 - 15:53:53 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-U.S. dollar, yen rise as investors ditch risky assets
* Dollar, yen up; markets cautious pre-earnings
* Higher-yielding currencies down as risk appetite wanes
* Euro extends losses after euro zone Q4 GDP revised lower
(Updates prices, adds quotes)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 7 (Reuters) - The dollar gained on Tuesday
as fears about the global banking sector ahead of the U.S.
corporate earnings season prompted investors to abandon risky
assets such as stocks and boosted the greenback's allure as a
The yen rebounded broadly and sharply, with short-term
market players unwinding trades in higher-yielding currencies
such as the Australian and New Zealand dollars that had been
financed with the Japanese currency because of its low interest
"It's quite clear that risk aversion is driving the market,
that's why we're seeing gains in the dollar and yen," said
Matthew Strauss, senior currency strategist at RBC Capital
Markets in Toronto.
"There is caution ahead of the earnings season. Although we
had some optimism about the economy in recent sessions, this
earnings season would be a reality check," he added.
Worries about the banking sector were front and center as
the corporate earnings season prepared to kick off.
In midday New York trading, the euro fell 1.0 percent to
$1.3270 <EUR=> after hitting a session low of $1.3228. Selling
in the euro accelerated after data showed a record contraction
in the euro zone economy.
Euro zone gross domestic product fell 1.6 percent in the
fourth quarter, the deepest ever quarterly fall and more than
the 1.5 percent decline reported previously. [ID:nL798677].
Against a basket of currencies, the dollar rose 0.6 percent
to 85.211 .DXY.
The dollar tends to rise when jitters in financial markets
mount, as investors still regard the dollar as a refuge in
times of crises.
The euro slid 1.6 percent against the yen to 133.25 yen
<EURJPY=>. The dollar was down 0.5 percent at 100.45 yen <JPY=>
after dipping to 99.88 yen, but the greenback gained broadly
MARKETS COULD RESUME RISK BIAS
Sterling was little changed versus the greenback, trading
at $1.4748 <GBP=>. The pound had a negative bias for most of
the session given the fall in stocks and weak UK manufacturing
European shares were down after opening modestly higher on
Tuesday, as financials weakened along with U.S. stocks, which
slumped more than 1 percent.
Still, other market participants were more optimistic. BNP
Paribas in a research note said skepticism after an equities
rally is normal, especially when the first negative earnings
shocks start to hit the market.
"However, the forward-looking nature of markets suggests
investors will see through this earnings trough. We expect
setbacks to be limited, allowing the recovery to resume over
the coming year," BNP said. The bank recommended using
pullbacks to build medium-term bullish trades on sterling and
the Australian dollar.
Meanwhile, the Australian dollar rose 0.2 percent against
its U.S. counterpart at US$0.7139 <AUD=> in choppy trading
after the Reserve Bank of Australia cut interest rates by 25
basis points to a record low 3.0 percent. It said it saw scope
for only modest easing further out. [ID:nSYD452265].
Also on Tuesday, the Bank of Japan announced it was leaving
interest rates at 0.1 percent. The decision was widely
expected, though the BOJ also unveiled further steps to ease
credit strains, announcing it would start lending against a
wider range of municipal debt to support regional banks
(Editing by Leslie Adler)
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."