The dollar fell against all of its major counterparts after the Federal Reserve announced its willingness to further ease monetary policy, damping demand for U.S. assets.
The greenback touched a five-month low this week against the euro after U.S. policy makers said Sept. 21 they “will provide additional accommodation if needed,” which may lead to lower U.S. interest rates. The euro touched a six-week week high against the yen as economic data in the U.S. and Europe increased investor appetite for higher-yielding assets. Investors next week will watch Japan for signals of yen sales after the nation sold its currency Sept. 15 to try and reduce its value to protect an export-led economic recovery.
“The U.S. dollar is coming under pressure from expected easing from the Fed,” said Blake Jespersen, director of foreign exchange in Toronto at Bank of Montreal. “As the stock market and commodities do well, it comes at the expense of the U.S. dollar.”
The dollar weakened 3.4 percent to $1.3492 per euro. On Sept. 24 the 16-nation currency touched its strongest level since April, when it reached $1.3495.
The yen strengthened 1.9 percent against the greenback to 84.26 per dollar. Japan’s currency slid as far as 85.40 yesterday as traders speculated Japan sold the currency again. The euro rose 1.5 percent to 113.69 yen.
Other Assets
The Standard & Poor’s 500 Index rose 2.1 percent from Sept. 17, its fourth straight weekly gain and the Reuters/Jefferies CRB Index of raw materials gained 1.4 percent, a fifth straight weekly advance.
The euro strengthened during four of the past five days as Ireland, Spain, Greece and Portugal found sufficient demand to sell sovereign debt. On Sept. 21 Ireland sold 1.5 billion euros ($1.97 billion) in a bond auction and Spain sold 7 billion euros of 12-month and 18-month bills, the maximum target. Greece sold 390 million euros of 13-week Treasury bills at a yield of 3.98 percent, the Athens-based Public Debt Management Agency said.
The Munich-based Ifo institute said its business-climate index, based on a survey of 7,000 executives, increased this month to 106.8, the highest since June 2007, from 106.7 in August. The median forecast of 36 analysts in Bloomberg News survey was for a drop to 106.4.
Decent Reading
“We got some reasonably positive news out of the euro zone this week so there’s been a brief reprieve for the euro,” said Samarjit Shankar, a managing director for the foreign-exchange group in Boston at Bank of New York Mellon.
The Swiss franc reached a record high against the dollar as Japan’s intervention in the market for its currency stoked demand for an alternative to the yen amid speculation the U.S. economy will weaken. The franc reached 98.49 centimes from 1.0048 Sept. 17.
The Federal Open Market Committee in a statement Sept. 21 in Washington said: “The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery.”
The U.S. Commerce Department may report next week, the U.S. gross domestic product probably expanded in the second quarter and consumer spending in August remained flat.
Data Trends
Orders for U.S. capital equipment rebounded in August and housing starts in the U.S. rose more than forecast, signaling a slowdown in business investment may be less severe than some economists projected.
The dollar’s losses accelerated as InterContinentalExchange Inc’s Dollar Index, which measures the U.S. dollar against its six-major counterparts fell 2.6 percent from Sept. 17. The index touched 79.27 Sept. 24, the weakest level since Feb. 3.
Demand for the yen has been tempered by speculation Japan will sell its currency again after intervening in the foreign- exchange market on Sept. 15 for the first time in more than six years. The yen has risen about 1.8 percent since the intervention pushed the currency down to a one-month low from a 15-year high.
The central bank is monitoring the yen’s strength, which is an impediment to the nation’s economic recovery, a Bank of Japan board member, Ryuzo Miyao, said Sept. 22 and Japanese government officials declined to comment on whether Prime Minister Naoto Kan’s administration had intervened in the currency market Sept. 24 after the yen slid 1.1 percent against the dollar in Tokyo trading.
“Last time there was a considerable outcry from Europe and a little from the U.S. so they didn’t to make it an overtly political gesture,” said Boris Schlossberg, director of research at online currency trader GFT Forex in New York. “The problem with intervention is every fresh wave loses more and more power as the market gets used to it.”
Trade Talks
The Chinese yuan appreciated 0.5 percent this week to 6.69 per dollar.
President Barack Obama pressed Chinese Premier Wen Jiabao met in a two-hour meeting at the United Nations Sept. 23 to increase the yuan’s value. The U.S. House Ways and Means Committee approved on Sept. 24 legislation letting companies petition for duties on Chinese imports to make up for a weak currency that lawmakers say creates an unfair subsidy.
The yuan has gained about 2 percent against the dollar since June 19, when the central bank said it would pursue a more flexible exchange rate.
To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net;
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
http://jodnet.blogspot.com
The greenback touched a five-month low this week against the euro after U.S. policy makers said Sept. 21 they “will provide additional accommodation if needed,” which may lead to lower U.S. interest rates. The euro touched a six-week week high against the yen as economic data in the U.S. and Europe increased investor appetite for higher-yielding assets. Investors next week will watch Japan for signals of yen sales after the nation sold its currency Sept. 15 to try and reduce its value to protect an export-led economic recovery.
“The U.S. dollar is coming under pressure from expected easing from the Fed,” said Blake Jespersen, director of foreign exchange in Toronto at Bank of Montreal. “As the stock market and commodities do well, it comes at the expense of the U.S. dollar.”
The dollar weakened 3.4 percent to $1.3492 per euro. On Sept. 24 the 16-nation currency touched its strongest level since April, when it reached $1.3495.
The yen strengthened 1.9 percent against the greenback to 84.26 per dollar. Japan’s currency slid as far as 85.40 yesterday as traders speculated Japan sold the currency again. The euro rose 1.5 percent to 113.69 yen.
Other Assets
The Standard & Poor’s 500 Index rose 2.1 percent from Sept. 17, its fourth straight weekly gain and the Reuters/Jefferies CRB Index of raw materials gained 1.4 percent, a fifth straight weekly advance.
The euro strengthened during four of the past five days as Ireland, Spain, Greece and Portugal found sufficient demand to sell sovereign debt. On Sept. 21 Ireland sold 1.5 billion euros ($1.97 billion) in a bond auction and Spain sold 7 billion euros of 12-month and 18-month bills, the maximum target. Greece sold 390 million euros of 13-week Treasury bills at a yield of 3.98 percent, the Athens-based Public Debt Management Agency said.
The Munich-based Ifo institute said its business-climate index, based on a survey of 7,000 executives, increased this month to 106.8, the highest since June 2007, from 106.7 in August. The median forecast of 36 analysts in Bloomberg News survey was for a drop to 106.4.
Decent Reading
“We got some reasonably positive news out of the euro zone this week so there’s been a brief reprieve for the euro,” said Samarjit Shankar, a managing director for the foreign-exchange group in Boston at Bank of New York Mellon.
The Swiss franc reached a record high against the dollar as Japan’s intervention in the market for its currency stoked demand for an alternative to the yen amid speculation the U.S. economy will weaken. The franc reached 98.49 centimes from 1.0048 Sept. 17.
The Federal Open Market Committee in a statement Sept. 21 in Washington said: “The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery.”
The U.S. Commerce Department may report next week, the U.S. gross domestic product probably expanded in the second quarter and consumer spending in August remained flat.
Data Trends
Orders for U.S. capital equipment rebounded in August and housing starts in the U.S. rose more than forecast, signaling a slowdown in business investment may be less severe than some economists projected.
The dollar’s losses accelerated as InterContinentalExchange Inc’s Dollar Index, which measures the U.S. dollar against its six-major counterparts fell 2.6 percent from Sept. 17. The index touched 79.27 Sept. 24, the weakest level since Feb. 3.
Demand for the yen has been tempered by speculation Japan will sell its currency again after intervening in the foreign- exchange market on Sept. 15 for the first time in more than six years. The yen has risen about 1.8 percent since the intervention pushed the currency down to a one-month low from a 15-year high.
The central bank is monitoring the yen’s strength, which is an impediment to the nation’s economic recovery, a Bank of Japan board member, Ryuzo Miyao, said Sept. 22 and Japanese government officials declined to comment on whether Prime Minister Naoto Kan’s administration had intervened in the currency market Sept. 24 after the yen slid 1.1 percent against the dollar in Tokyo trading.
“Last time there was a considerable outcry from Europe and a little from the U.S. so they didn’t to make it an overtly political gesture,” said Boris Schlossberg, director of research at online currency trader GFT Forex in New York. “The problem with intervention is every fresh wave loses more and more power as the market gets used to it.”
Trade Talks
The Chinese yuan appreciated 0.5 percent this week to 6.69 per dollar.
President Barack Obama pressed Chinese Premier Wen Jiabao met in a two-hour meeting at the United Nations Sept. 23 to increase the yuan’s value. The U.S. House Ways and Means Committee approved on Sept. 24 legislation letting companies petition for duties on Chinese imports to make up for a weak currency that lawmakers say creates an unfair subsidy.
The yuan has gained about 2 percent against the dollar since June 19, when the central bank said it would pursue a more flexible exchange rate.
To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net;
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
http://jodnet.blogspot.com
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