Saturday, August 15, 2009
Euro Rises for 3rd Day on Optimism Europe’s Contraction Slowed
The euro also advanced against 13 of the 16 major currencies before a U.S. report that may show retail sales gained for a third month, prompting investors to seek higher- yielding assets. South Korea’s won led Asian currencies higher after the Federal Reserve acknowledged that the worst U.S. recession since the 1930s may be ending, helping shore up demand for riskier assets. “I expect growth in the euro-zone economy will be very high” later this year and that should benefit the euro, said Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney. “I will be surprised if we didn’t see something positive in the second half of this year.” The euro strengthened to $1.4224 as of 11:06 a.m. in Tokyo from $1.4188 yesterday in New York. The 16-nation currency rose to 136.47 yen from 136.32 yen. The yen was at 95.96 per dollar from 96.06. The won rose 0.8 percent to 1,236.60 per dollar.
Morning Forex Overview
The euro rose against the yen and the dollar in Asia Thursday as firm Asian share markets spurred demand for the riskier euro.
Overnight comments by the Federal Reserve also led to a more optimistic economic outlook among traders, nudging them to take more risks and buy the single currency, dealers said. The euro's near-term direction is slightly upward, they added.
Regional share markets were broadly higher. As of 0530 GMT Japan's benchmark Nikkei 225 Stock Average index was up 1.0%, while stock markets in South Korea, India and Australia also gained.
Some Japanese banks sold the dollar for the yen due to redemptions of dollar-denominated bonds, traders said.
The Euro tested USD1.4100 before bouncing hard on USD weakness in the US session, shrugging off the FOMC report to finish above USD1.4200. June Industrial Production fell -0.6% vs. 0.3% forecast. EURJPY had a wild day trading in a 3 yen range on the change in risk appetite. EURGBP remained supported on GBP weakness.
British pound propped up by a weaker US dollar despite bearish sentiment in their country. Bank of England said inflation will stay below its 2 percent target as its economy undergoes a "slow and protracted" recovery. UK Central bank Governor Mervyn King said it is "more likely than not" that inflation will slow below 1 percent this year and unemployment reached a 14-year high. Thus, UK interest rates are expected to remain on hold for a while.
The Australian dollar reversed course Thursday, rallying as risk appetite regained lost ground while long-dated bond futures were sold. Spurring the risk-buying mood in Asia was a relatively optimistic outlook from the U.S. Federal Reserve, which didn't extend it's bond buying program and said the economy's contraction is slowing.
Market expectation
The euro is marginally higher against the dollar, yen and UK pound as short-term Asian investors buy on higher risk tolerance.
EURUSD reported offers placed between USD1.4265/70 able to contain the early GDP react driven rally, with underlying tone remaining firm. Rate currently trades around USD1.4257 after touching fresh intraday highs at USD1.4268 (50% USD1.4448/1.4086). Above USD1.4270 may open a move on toward USD1.4280/85.
For Pound offers seen placed above USD1.6585 through to USD1.6600, a break to open a move on toward USD1.6615/20 ahead of stronger level at USD1.6650. Support now seen placed at USD1.6550, a break below USD1.6540 to open a deeper move back toward USD1.6510/00.
Attention now turns to U.S. retail sales data at 1230 GMT and second-quarter earnings from Wal-Mart Stores Inc. later in the day to gauge whether consumption is recovering in the U.S.
The euro could rise toward JPY138.00 and USD1.4300, if those figures come in better than expected, adding to the positive outlook for the U.S. economy, dealers said.
European stock markets are expected to open higher Thursday, as investors react with optimism to the latest comments from the Federal Reserve about the strength of the U.S. economy, the world's largest.
Overnight comments by the Federal Reserve also led to a more optimistic economic outlook among traders, nudging them to take more risks and buy the single currency, dealers said. The euro's near-term direction is slightly upward, they added.
Regional share markets were broadly higher. As of 0530 GMT Japan's benchmark Nikkei 225 Stock Average index was up 1.0%, while stock markets in South Korea, India and Australia also gained.
Some Japanese banks sold the dollar for the yen due to redemptions of dollar-denominated bonds, traders said.
The Euro tested USD1.4100 before bouncing hard on USD weakness in the US session, shrugging off the FOMC report to finish above USD1.4200. June Industrial Production fell -0.6% vs. 0.3% forecast. EURJPY had a wild day trading in a 3 yen range on the change in risk appetite. EURGBP remained supported on GBP weakness.
British pound propped up by a weaker US dollar despite bearish sentiment in their country. Bank of England said inflation will stay below its 2 percent target as its economy undergoes a "slow and protracted" recovery. UK Central bank Governor Mervyn King said it is "more likely than not" that inflation will slow below 1 percent this year and unemployment reached a 14-year high. Thus, UK interest rates are expected to remain on hold for a while.
The Australian dollar reversed course Thursday, rallying as risk appetite regained lost ground while long-dated bond futures were sold. Spurring the risk-buying mood in Asia was a relatively optimistic outlook from the U.S. Federal Reserve, which didn't extend it's bond buying program and said the economy's contraction is slowing.
Market expectation
The euro is marginally higher against the dollar, yen and UK pound as short-term Asian investors buy on higher risk tolerance.
EURUSD reported offers placed between USD1.4265/70 able to contain the early GDP react driven rally, with underlying tone remaining firm. Rate currently trades around USD1.4257 after touching fresh intraday highs at USD1.4268 (50% USD1.4448/1.4086). Above USD1.4270 may open a move on toward USD1.4280/85.
For Pound offers seen placed above USD1.6585 through to USD1.6600, a break to open a move on toward USD1.6615/20 ahead of stronger level at USD1.6650. Support now seen placed at USD1.6550, a break below USD1.6540 to open a deeper move back toward USD1.6510/00.
Attention now turns to U.S. retail sales data at 1230 GMT and second-quarter earnings from Wal-Mart Stores Inc. later in the day to gauge whether consumption is recovering in the U.S.
The euro could rise toward JPY138.00 and USD1.4300, if those figures come in better than expected, adding to the positive outlook for the U.S. economy, dealers said.
European stock markets are expected to open higher Thursday, as investors react with optimism to the latest comments from the Federal Reserve about the strength of the U.S. economy, the world's largest.
Germany, France exit recession early
German gross domestic product rose by 0.3 percent in the second quarter, bringing an end to the country's deepest recession since World War Two and boosting hopes of recovery in the broader euro zone. French GDP also grew by 0.3 percent in the second quarter. The consensus in a Reuters poll of economists had predicted a 0.3 percent quarterly contraction in both countries. "The data is very surprising. After four negative quarters France is finally coming out of the red," French Economy Minister Christine Lagarde told RTL radio. Germany suffered a calamitous 3.5 percent contraction in the first quarter of this year to cap four quarters of decline while the French economy shrank by 1.3 percent.
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