Wednesday April 8, 2009 - 11:47:55 GMT
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Reuters - www.reuters.com
FOREX NEWS - Euro falls vs dollar and yen as shares fall
* Euro falls vs dollar, yen as shares stumble
* U.S. corporate earnings season worries sap risk appetite
* German industrial orders fall 3.5 pct m/m in Feb
* US Fed minutes later Weds, BoE rate decision Thurs awaited
(Adds quotes, updates prices, changes byline)
By Jessica Mortimer
LONDON, April 8 (Reuters) - The euro fell against the dollar
and the yen on Wednesday as jitters ahead of the U.S. corporate
earnings season pushed shares lower and dented demand for
currencies perceived to be higher risk.
European shares fell 0.6 percent .FTEU3 and U.S. S&P 500
futures lost 0.5 percent SPc1 after Alcoa (AA.N: Quote, Profile, Research, Stock Buzz) on Tuesday
began the earnings season by reporting a loss, raising concerns
that other firms may also post poor results in the coming weeks.
As investors increasingly shunned risky assets this stoked
demand for the perceived safety of the U.S. dollar and the
Japanese yen, which typically gain in times of heightened risk
Alongside other currencies seen as higher risk, the euro
came under selling pressure, with data showing German industrial
orders fell a bigger-than-expected 3.5 percent during February
emphasising the troubles facing Europe's largest economy
Earlier comments from Dallas Federal Reserve President
Richard Fisher that the euro faced even more problems than the
dollar also hit the common currency.
However, analysts said with liquidity thin ahead of the
Easter weekend and little in the way of major data releases,
currencies are being driven by market risk sentiment and equity
"This week there is very little economic data on the agenda
that could have the power to move currency markets," said
Brussels-based KBC market analyst Peter Wuyts.
"In the absence of other important guides, risk aversion is
the most obvious driver," he said.
He said currency movements had been mirroring equities
closely and that this was likely to remain the case going into
the long weekend.
At 1048 GMT, the euro <EUR=> traded 0.2 percent lower at
$1.3246 as it continued to retreat from a climb to nearly $1.36
at the start of the week when market optimism still reigned in
the wake of last week's summit of Group of 20 leaders.
Against the yen <EURJPY=R>, the common European currency was
down 0.6 percent at 132.43 yen.
The dollar was higher against the euro on its perceived
safety, although its was lower against the yen <JPY=>, falling
0.5 percent to 99.96 yen.
The Japanese currency continued its rebound, breaking
further below the key 100 yen level against the dollar after the
U.S. currency hit a six-month high of 101.45 yen earlier in the
The U.S. and Japanese currencies are likely to keep drawing
demand as investors stay away from higher-yielding currencies
such as the Aussie, dealers said.
The yen rallied against sterling and the Australian and New
Zealand dollars, which fell around 1 percent and 0.7 percent
respectively <AUDJPY=> <NZDJPY=> versus the yen.
"With risk aversion lingering commodity currencies (such as
the Australian and New Zealand dollars) are most vulnerable to a
further leg lower," currency strategists at Bank of Scotland
Treasury said in a note to clients.
FED MINUTES, BOE AHEAD
In a speech in Tokyo on Wednesday, the Fed's Richard Fisher
said the U.S. economy was grim, while adding that the problems
facing the euro were "perhaps even more substantial" than those
of the dollar [ID:nNYS004984].
Fisher, who is not a voting member of the Fed's
policy-setting committee this year, also said that he would not
comment on whether the dollar's recent climb would be
Later on Wednesday the Fed will release minutes from its
policy meeting in March, when it announced it would start buying
longer-dated U.S. Treasuries as part of quantitative easing.
Markets are also awaiting a policy decision by the Bank of
England on Thursday, where rate setters are expected to leave UK
interest rates on hold at 0.5 percent [BOE/INT].
In other news, Ireland announced its second emergency budget
in six months on Tuesday, which traders said also weighed on the
euro as it highlighted strains in the euro zone.
The budget included harsh spending cuts and tax increases,
and it is expected to face a significant increase in gross
national debt to finance a new agency to buy soured bank loans.
(Reporting by Jessica Mortimer)
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