Wednesday May 20, 2009 - 09:34:00 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar, yen edge lower as markets assess risks
* Euro up 0.1 pct vs dollar, sheds loss vs yen
* BoE voted 9-0 to expand QE; U.S. FOMC meeting minutes eyed
* Japan's Q1 GDP contracts 4.0%, in line with expectations
(Adds BoE minutes, quote, updates prices)
By Tamawa Desai
LONDON, May 20 (Reuters) - The dollar and yen edged lower on
Wednesday as equity markets reversed early losses, prompting
investors toward perceived riskier assets.
But market players were wary of taking on large positions
amid a dearth of front line economic data, taking a cue from
"We are still in a consolidation phase as markets are trying
to determine whether an economic recovery will take hold later
this year," said Lee Hardman, currency economist at Bank of
"But players are cautious of becoming too pro-risk without
seeing hard data."
By 0905 GMT, the euro was up 0.1 percent at $1.3645 <EUR=>.
Technical analysts say the pair faces heavy chart resistance
above $1.37 at May and March highs.
The single currency was flat at 130.78 yen <EURJPY=R> after
falling to 129.76 yen earlier in the global session.
Investor confidence was somewhat buoyed after European
stocks .FTEU3 pared early losses to rise 0.5 percent while
U.S. stock futures were also higher after a mixed close on Wall
Street on Tuesday.
Markets showed little reaction to German producer prices
which fell a bigger-than-expected 1.4 percent in April from the
previous month, the sixth monthly decline. [ID:nLK122145]
Sterling also gained, hitting a fresh five-month high of
$1.5538 <GBP=D4> as pessimism about the UK economy and financial
Minutes from the Bank of England's May policy-setting
meeting showed policymakers voted unanimously to keep interest
rates at a record low of 0.5 percent and extend its quantitative
easing programme by 50 billion pounds, although they discussed a
bigger increase. [ID:nLK954208]
Minutes from the U.S. Federal Reserve's policy-setting
meeting on April 28-29 will be released later in the day.
Earlier, data showed Japan's economy shrank a record 4.0
percent in the first quarter as companies slashed investment and
exports, but economists saw a return to modest growth in the
coming quarters even if the longer-term outlook remains unclear.
"The market for now at least appears willing to look on the
bright side and interpreted the numbers as perhaps signalling
the bottom for the economy," said analysts at Calyon in a note.
The dollar was down 0.2 percent at 95.82 yen after hitting a
low around 95.50 yen earlier in the session <JPY=>.
(Editing by Stephen Nisbet, editing by Mike Peacock)
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