Tuesday September 8, 2009 - 10:31:59 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dlr slumps to 1-yr low on major currencies; gold rallies
Tue Sep 8, 2009 5:12am EDT
* Commody-linked currencies at one-yr highs on gold glitter
* Euro at strongest on dlr in a month; firmer shares help
* Focus on U.S. markets reopening for further cues
(Recasts with Aussie at new 1 yr peak, changes byline, dateline previously TOKYO)
By Emelia Sithole-Matarise
LONDON, Sept 8 (Reuters) - The dollar slumped to its lowest in almost a year against a basket of major currencies on Tuesday as gold rallied above $1,000 an ounce with traders citing talk of reserve diversification into gold undermining the U.S. currency.
Renewed concern over the dollar's long-term status as the world's reserve currency sparked by a United Nations agency report on Monday [ID:nL7696421] and options-related euro buying also fuelled the broad-based dollar selling.
"A combination of a pick-up in industrial activity being cemented and talk of reserve diversification into gold is keeping dollar on the back foot," said Chris Turner, head of FX strategy at ING.
"There is more evidence of industrial activity picking, from German data on Monday and UK data today. That means re-stocking in Q3 which is good for commodities and commodity currencies."
The dollar index, a gauge of the greenback's performance against six major currencies, fell almost one percent on the day to 77.398 .DXY.
Against the yen, the dollar dipped 0.8 percent from late Monday trade to 92.23 yen JPY=.
The euro rose as high as $1.4438 EUR=, according to Reuters charts, up two thirds of a percent on the day, and the dollar's trade-weighted index fell 0.75 percent to 77.445 .DXY.
Gold jumped more than 1 percent to $1,007.45 an ounce XAU=, its highest since March last year.
KEY LEVELS BREACHED
This helped hoist the Australian and New Zealand dollars to their strongest levels in a year against the U.S. dollar.
The Aussie AUD=D4 rose as high as $0.8634, its highest since August 2008. Data also showed Australia's business confidence hit a six-year high in August, adding to mounting speculation that local rates will rise in coming months, providing overall support to the Aussie.
"Risk appetite remains the key driver for these currency markets," said Daragh Maher, deputy head of global currency research at Calyon in London.
"We saw the Chinese equity market which was lower in the early part of the session rebound quite sharply in second half of the session that has given the broad equity theme a lift. That's helped drive the risk currencies a bit higher."
European shares were up 0.5 percent by 0850 GMT. Investors had been encouraged by global financial chiefs' statements at the weekend that it was too soon to start unwinding fiscal, monetary and financial-sector stimulus measures.
The Australian dollar AUD=D4 rose as high as $0.8634, its highest in just over a year. Data also showed Australia's business confidence hit a six-year high in August, adding to mounting speculation that local rates will rise in coming months, providing overall support to the Aussie.
With currencies and gold hitting those key levels, currency market participants were now waiting for U.S. markets to reopen after Monday's holiday for clues on whether the rally in riskier currencies will be sustained.
The kiwi NZD=D4 rose to a new one-year high of $0.6944 NZD=D4, extending the previous session's gains. The gains come ahead of a Reserve Bank of New Zealand meeting on Thursday to decide on monetary policy.
The recent surge in the kiwi could be a focus of Governor Alan Bollard, who has expressed his discomfort with its rise. The currency has rallied 30 percent since March, forcing monetary conditions to tighten to the frustration of the RBNZ which threatened to cut interest rates at its last meeting in July.
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."