FOREX NEWS-Risk aversion lifts dollar; pound falls after BoE
Thu Aug 6, 2009 4:06pm EDT
* Sterling tumbles as BoE expands asset buying program
* ECB keeps rates at 1 pct, sees gradual recovery in '10
* Fewer U.S. weekly jobless claims than expected
* Risk-taking fades as markets await U.S. nonfarm payrolls (Updates prices, adds detail)
By Steven C. Johnson
NEW YORK, Aug 6 (Reuters) - Sterling plunged on Thursday after Britain's central bank said it would pump more money into a still fragile banking system while the dollar gained on the euro ahead of a much anticipated U.S. employment report.
The Bank of England did not change interest rates but surprised markets by raising the size of a bond purchasing program designed to boost lending. That would require it to print more money, leading to an oversupply of sterling.
The pound fell more than 1 percent against the dollar, retreating from a 10-month peak above $1.70. It also fell against the euro after the European Central Bank left interest rates at 1 percent and predicted a gradual recovery in 2010.
Analysts said the BoE's move suggested the UK economy is still struggling, sentiment that injected caution into a market eager to buy higher-risk currencies and assets.
"The BoE move was a surprise and is a double-edged sword. It's reassuring that they are prepared to do what's needed but also hints that the global recovery may not be as aggressive as markets had thought," said Mike Moran, senior FX strategist at Standard Chartered in New York.
Thursday's bout of risk aversion hit Wall Street stocks [.N], and lifted the dollar off multi-month lows against the euro and other currencies as investors sought a safe haven.
Investors also hedged positions ahead of Friday's nonfarm payrolls data, which is expected to show the pace of U.S. job losses slowed in July [ID:nN05247775].
The euro fell 0.4 percent to $1.4348 EUR=, retreating from a nine-month high of $1.4446 earlier this week. Sterling fell 1.2 percent to $1.6778 GBP=. The euro rose 0.6 percent against sterling to 85.52 pence EURGBP=. Against the yen, the dollar rose 0.6 percent to 95.42 yen JPY=.
Standard Chartered's Moran said markets were ripe for a pullback as equities, commodities and several foreign currencies have pushed into overbought territory in recent sessions.
To reignite the rally, investors will want to see that the U.S. labor market is following the manufacturing and housing sectors, which have both flashed some encouraging signals that the worst of the recession may be over, he said.
Economists polled by Reuters expect data to show employers cut 320,000 jobs in July, down from a loss of 467,000 jobs the prior month.
If that forecast proves accurate, analysts said, the dollar would likely fall as investors redirect money into stocks, commodities and currencies that promise higher returns.
Data on Thursday showing that the number of Americans filing for first-time jobless benefits fell in the week to Aug. 1 whetted appetites for more good news on the job front. [ID:nN06313199]
But there's still reason to be cautious, meaning that currency investors may want to be wary of prematurely extending bets against the dollar, analysts said.
"The harsh reality is that companies are not going to start hiring any time soon. Consumers won't be able to bring this country out of recession via spending," said Jessica Hoversen, fixed-income and currency analyst at MF Global in Chicago. "And in Europe, some of its largest economies are still very fragile." (Additional reporting by Vivianne Rodrigues; Editing by Leslie Adler)
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
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
Forex News 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."
Elevate Your Trading With The Amazing Trader!
The Amazing Trader includes:
Actionable trading levels delivered to YOUR charts in real-time.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.