Wednesday June 13, 2007 - 10:42:14 GMT
Reuters - www.reuters.com
Share This Story:

|

|
Email
FOREX NEWS-Dlr at 4-1/2 yr high vs yen as US yields power up
FOREX-Dlr at 4-1/2 yr high vs yen as US yields power up
Wed Jun 13, 2007 6:27 AM ET
(Updates price, adds quotes, changes dateline)
By Veronica Brown
LONDON, June 13 (Reuters) - The dollar rose to a 4-1/2 year high against the yen and 11-week peak versus the euro on Wednesday after a rally in U.S. Treasury yields drew investors towards the greenback. Markets were also awaiting U.S. retail sales data, the Federal Reserve Beige Book and speeches from Fed officials, having ditched expectations of lower U.S. interest rates later this year.
"Bond yields and asset markets in general are playing a major role in what's going on. A break higher (in U.S. 10-year Treasury yields) suggests yields heading even higher so the dollar is picking up support," BNP Paribas senior currency strategist Ian Stannard said.
"If we start to see a simultaneous sell-off in equity markets, and they do seem to be under pressure, we could see this turning into a broader risk aversion story," he added.
By 0954 GMT, the dollar was up 0.5 percent at 122.32 yen
, having hit a 4-1/2 year peak of 122.37. The euro was up 0.3 percent at 162.37 yen but had fallen to $1.3264 , its weakest since late March.
Earlier the benchmark U.S. 10-year yield hit five-year highs of 5.33 percent on views that robust global economic growth could prompt central banks to raise interest rates, and due to selling by mortgage players.
The Swiss franc fell to a four-month low of 1.2463 per dollar before an interest rate decision by the Swiss National Bank on Thursday. The SNB is expected to raise rates.
TREASURY REPORT
New York Fed President Timothy Geithner, Fed Board Governor Randall Kroszner and Dallas Fed President Richard Fisher are due to speak later on Wednesday and the Fed will release its Beige Book on regional economic conditions at 1800 GMT.
U.S. retail sales, due at 1230 GMT, are forecast up 0.6 percent month-on-month in May, having dropped 0.2 percent in April.
Investors are also likely to take a cue from the U.S. Treasury Department's semi-annual report on currency practices of foreign trading partners.
Before release of the report, the top Democrat and Republican on the Senate Banking Committee said on Tuesday they would introduce legislation giving the Treasury Department stronger tools to confront China's currency practices.
The U.S. Treasury Department has pushed China to move to a more flexible market-oriented exchange rate policy, but has frustrated many lawmakers and manufacturers by refusing to label China as a currency manipulator.
"The Treasury will likely stop short of labelling China as a currency manipulator, but the report's tone may be reflective of deep frustration on Capitol Hill over lack of progress," UBS said in a note to clients.
"Much to the administration's displeasure, WTO-compliant legislation targeting currencies will be introduced this week in the U.S. Senate and have a much more realistic chance of being passed than last year's Schumer-Graham bill."
© Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Forex Trading News
Forex Research
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
here.
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."