Friday June 19, 2009 - 10:29:44 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dollar, yen pressured; moves limited ahead of Fed
* Euro up 0.1 pct at $1.3914 EUR=
* Aussie dlr up 0.5 pct vs U.S. dollar
* BBA change for Libor may help dollar
* Moves capped ahead of U.S. Fed policy meet next week
By Tamawa Desai
LONDON, June 19 (Reuters) - The dollar and yen came under
pressure on Friday as brighter U.S. economic data reinforced
expectations for the global growth outlook, but moves were
limited before a U.S. Federal Reserve policy meeting next week.
Higher-yielding currencies such as the Australian dollar
gained, but investors were reviewing whether a recent rally in
riskier assets was justified given the global economy was still
struggling to emerge from its worst recession in decades.
"The leading indicator data aren't enough to start an upward
trend," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFJ. "The markets needs to see more hard
evidence to confirm the improvement that they expect."
The dollar and yen were weighed after data on Thursday
showed the number of people on jobless benefits fell for the
first time since January, while manufacturing in the U.S.
Mid-Atlantic region contracted much less than expected in June.
A dearth of economic data on Friday meant position
adjustments ahead of the weekend may dominate trade, dealers
At 0816 GMT, the euro was up 0.1 percent at $1.3920 EUR=.
But it stayed below Thursday's high of $1.4002 on trading
platform EBS and below its 2009 peak of $1.4339.
The Australian dollar gained 0.5 percent to $0.837 AUD=.
The dollar edged up 0.2 percent to 96.83 yen JPY=, holding
firm after Wall Street gained the previous day to break a
three-day losing streak and prompted traders to cover their yen
long positions across the board.
The euro gained 0.3 percent against the yen to 134.80 yen
EURJPY=R while the Aussie dollar also rose 0.8 percent against
the Japanese unit.
The yen had risen to multi-week highs against other
currencies earlier this week as investors reduced riskier bets
on higher-yielding units such as the Australian dollar.
The currency market also remained sensitive to bond yields.
Speculation that rates will rise on the back of an expected
change to the London Interbank offered rate (Libor) may be a
supportive factor for the dollar, some analysts said.
The British Bankers' Association said on Thursday it will
change its definition of the Libor to allow a greater number of
institutions to participate in the daily rate fixing process.
"The market appears to think that more banks mean a greater
chance of higher fixings as banks which reported lower fixings
to hide difficulties during times of stress would be less
effective in distorting rates," said UBS in a research note.
"We think the knock-on from the BBA report is good news for
the dollar. The simple way to look at it is from a perspective
of interest rate differentials moving in favour of the dollar."
The other big focus for the market will be the U.S. Federal
Open Market Committee meeting set for June 23-24.
Markets will watch whether the Fed will address a recent
rise in short- and long-term interest rates. The Fed may extend
its purchase of U.S. Treasuries but an aggressive expansion of
buying is not likely. [ID:nN16283024]
Meanwhile, the Swiss franc remained under pressure after
traders on Thursday cited Swiss franc selling against the euro
on behalf of the Swiss National Bank, on which the central bank
declined to comment.
The move came after the SNB said it would continue its
ultra-easy monetary policy on Thursday, and renewed a pledge to
take action in the currency market to keep the Swiss franc
rising against the euro.
The euro was up 0.1 pct at 1.5124 francs EURCHF= after
climbing as high as 1.5149 francs on EBS on Thursday.
(Editing by Toby Chopra)
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