LONDON, Aug 21 (Reuters) - The yen strengthened broadly and high-yielding currencies weakened on Tuesday as continued nervousness in financial markets prompted wary investors to shun carry trades.
European stock markets struggled to make headway, government bonds rose and spreads of emerging market debt over benchmark Treasury yields widened, all reflecting investors' caution on the current state of global markets.
The chief executive of German state-backed bank WestLB said on Tuesday the country's banking sector was in a "not uncritical situation" and the Bank of England said it had lent money to an unidentified borrower or borrowers on Monday via its standing facility.
This is the first time it has lent via this facility, which is fixed at 100 basis points above the base rate, in over a month. While not in itself a major surprise, the news did little to soothe worries that the credit distress swirling through markets shows no sign of dissipating.
"Our risk indicator, which measures risk appetite from a more macro level, confirms that a major shift in medium-term market sentiment is taking place, suggesting that the impact from the current credit crisis is likely to be more significant and prolonged than the market was initially assuming," said Ian Stannard, senior currency strategist at BNP Paribas in London.
"Equity markets hold the key, especially in the short term. A renewed selloff in equities will put the carry trade back under pressure."
At 1000 GMT the dollar was down 0.7 percent against the yen at 114.14 yen <JPY=>, and the euro was also 0.7 percent lower at 153.75 yen <EURJPY=>.
The New Zealand dollar was down 1 percent against the yen at 79.23 yen <NZDJPY=> and sterling was down 1.2 percent at 225.71 <GBPJPY=R>.
EYES ON PAULSON, BERNANKE
The Australian dollar was down 1 percent against the greenback at $0.7985 <AUD=>, while sterling was down 0.5 percent at $1.9775 <GBP=>.
The dollar was steady versus the euro at $1.3471 <EUR=>.
The euro held steady after the European Central Bank held its weekly tender, allotting 275 billion euros in 7-day refinancing to the region's banks. See [nL21832470].
Investors are now turning their attention to a meeting between Fed Chairman Ben Bernanke, Treasury Secretary Henry Paulson and Senate Banking Committee Chairman Chris Dodd later on Tuesday at which they will discuss conditions in financial markets.
The closed-door meeting is to take place at 1400 GMT and Dodd is expected to hold a news conference afterwards.
Last Friday the Fed cut the discount rate it charges on direct loans to banks by half a percentage point to 5.75 percent, saying credit market tightening could slow U.S. growth.
That fuelled expectations that the U.S. central bank could lower the federal funds rate from the current 5.25 percent, given the threat to the economy from evaporating credit.
"Volatility prevails across financial markets as the euphoria which met Friday's actions by the Fed gives way to a more realistic assessment of the state of play," wrote Neil Mellor, currency strategist at Bank of New York-Mellon in a note to clients on Tuesday.
The market will also look to comments by Richmond Fed President Jeffrey Lacker in a speech on the economic outlook at 1630 GMT.
Currencies paid scant attention to data that showed Germany's ZEW investor sentiment index falling much more than expected in August, or June trade data for the euro zone. See [nBAE000830] and [nL2158887].
Reuters journalists are subject to the Reuters 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.