Dollar gains on euro after US shares jump
Wednesday, 3 October 2007
TOKYO, Oct 2 (AFP): The dollar firmed against the euro in Asian trade today, moving away from its record low as a surge in US share prices offered some respite to the struggling greenback, dealers said.
The euro slipped to 1.4221 dollars in Tokyo afternoon trade from 1.4231 in New York late Monday.
The single European currency briefly hit another record high of 1.4283 at the start of the week but the dollar has since clawed back some ground.
The euro eased to 164.18 yen from 164.71, while the dollar declined to 115.46 yen from 115.73.
The greenback garnered support from a strong performance by Wall Street, where the Dow Jones index hit a record closing high above 14,000 as investors anticipated another cut to US interest rates later this month.
Investors appeared optimistic that the worst of the financial turbulence linked to US subprime mortgage woes had passed.
"The strong investor confidence that is blaring from Wall Street should continue to underpin the yen-funded carry trade," said John Noonan, an analyst at Thomson IFR.
Recent financial market volatility has dampened demand for such carry trades, which involve selling low-yielding currencies such as the yen to buy high- return currencies and assets elsewhere.
Dealers are looking for signs of an increased appetite for risk, which would be likely to weigh on the yen.
Financial markets have held their nerve in the face of heavy write-downs announced by banking giants Citigroup and UBS due to failed mortgage investments as more transparency had reduced fear of the unknown, dealers said.
"The perception was that large write-downs of earnings suggested that most, if not all, of the bad news was now disclosed," NAB Capital strategists wrote in a note to clients.
Dealers are looking ahead to a batch of US economic data, including home sales for August due later Tuesday as well as Friday's key labour market report.
They will be looking for clues about the outlook for the US economy and the Federal Reserve's next policy move at its meeting later this month.
The Fed slashed its fed funds rate 50 basis points to 4.75 per cent last month and investors expect further cuts if economic data turns out to be poor, dealers said.
Markets were spooked last month by news the US lost an estimated 4,000 jobs, raising concerns that credit market woes are spilling over into the labour market, which has been one of the strongest pillars of the US economy.
Investors will also be paying attention to monetary policy meetings at the European Central Bank and the Bank of England Thursday, although the market widely expects rates to be held steady.
The dollar edged up to 1.4787 Singapore dollars from 1.4773 a day earlier and to 32.57 Taiwan dollars from 32.50.
The greenback slipped to 913.45 South Korean won from 914.45, to 9,070 Indonesian rupiah from 9,086, to 31.76 Thai baht from 31.86 and to 44.85 Philippine pesos from 44.88.
The euro slipped to 1.4221 dollars in Tokyo afternoon trade from 1.4231 in New York late Monday.
The single European currency briefly hit another record high of 1.4283 at the start of the week but the dollar has since clawed back some ground.
The euro eased to 164.18 yen from 164.71, while the dollar declined to 115.46 yen from 115.73.
The greenback garnered support from a strong performance by Wall Street, where the Dow Jones index hit a record closing high above 14,000 as investors anticipated another cut to US interest rates later this month.
Investors appeared optimistic that the worst of the financial turbulence linked to US subprime mortgage woes had passed.
"The strong investor confidence that is blaring from Wall Street should continue to underpin the yen-funded carry trade," said John Noonan, an analyst at Thomson IFR.
Recent financial market volatility has dampened demand for such carry trades, which involve selling low-yielding currencies such as the yen to buy high- return currencies and assets elsewhere.
Dealers are looking for signs of an increased appetite for risk, which would be likely to weigh on the yen.
Financial markets have held their nerve in the face of heavy write-downs announced by banking giants Citigroup and UBS due to failed mortgage investments as more transparency had reduced fear of the unknown, dealers said.
"The perception was that large write-downs of earnings suggested that most, if not all, of the bad news was now disclosed," NAB Capital strategists wrote in a note to clients.
Dealers are looking ahead to a batch of US economic data, including home sales for August due later Tuesday as well as Friday's key labour market report.
They will be looking for clues about the outlook for the US economy and the Federal Reserve's next policy move at its meeting later this month.
The Fed slashed its fed funds rate 50 basis points to 4.75 per cent last month and investors expect further cuts if economic data turns out to be poor, dealers said.
Markets were spooked last month by news the US lost an estimated 4,000 jobs, raising concerns that credit market woes are spilling over into the labour market, which has been one of the strongest pillars of the US economy.
Investors will also be paying attention to monetary policy meetings at the European Central Bank and the Bank of England Thursday, although the market widely expects rates to be held steady.
The dollar edged up to 1.4787 Singapore dollars from 1.4773 a day earlier and to 32.57 Taiwan dollars from 32.50.
The greenback slipped to 913.45 South Korean won from 914.45, to 9,070 Indonesian rupiah from 9,086, to 31.76 Thai baht from 31.86 and to 44.85 Philippine pesos from 44.88.