🐂 Not all bull runs are created equal. November’s AI picks include 5 stocks up +20% eachUnlock Stocks

FOREX-Dollar, yen firmer after GE, BofA results

Published 07/17/2009, 07:54 AM
Updated 07/17/2009, 08:00 AM
C
-
BAC
-
IBM
-

* Uncertainty on US corporate outlook supports dollar, yen

* Euro down 0.4 percent at $1.4088; down 0.5 percent vs yen

* Weak GE, Bank of America earnings push US stock futures dn

* Jakarta blasts put pressure on risk appetite but limited

(Adds quotes, details; changes byline)

By Jessica Mortimer

LONDON, July 17 (Reuters) - The dollar and yen were firmer against other major currencies on Friday as uncertainty over how U.S. companies are faring encouraged investors to shy away from risk.

Earnings from General Electric and Bank of America sparked concern about the outlook for major firms, pushing U.S. S&P 500 futures down 0.5 percent.

This encouraged currency investors to continue to shun risk as they steered away from the euro and perceived riskier currencies like the Australian dollar in favour of the yen and the dollar, analysts said.

GE sparked concern as it reported second quarter profits fell by almost half and revenues dropped more than forecast, while Bank of America also reported a lower quarterly profit.

Investors awaited results from Citigroup later in the day, while next week will see a raft of major U.S. companies reporting, including many from outside the financial sector.

"The U.S. earnings season is not over yet and the market will remain very uncertain and volatile until a clearer picture emerges on how the U.S. corporate sector has come through the second quarter," Brown Brothers Harriman currency strategist Audrey Childe-Freeman said.

"Currencies are very much driven by sentiment on equity markets at the moment, which is difficult to predict, but the current uncertainty is helping the dollar higher," she added.

By 1146 GMT, the euro was down 0.4 percent at $1.4088 and down 0.5 percent at 131.97 yen.

The euro remained up around one percent against the dollar this week, however, leaving it on track for its best weekly performance since the end of May.

The dollar index was up 0.4 percent at 79.520 after falling to a six-week low at 79.131 the previous day, while the U.S. currency dipped 0.1 percent to 93.65 yen.

CAUTION REMAINS

Earlier this week, the market cheered stellar earnings results from Goldman Sachs and JPMorgan Chase, as well as big corporates such as Intel, IBM and Google, but investors were reluctant to jump to optimistic conclusions.

"We knew the major banks were doing well, but that doesn't tell us much about the economy, nor does it tell us whether the crisis is over," Brown Brothers' Childe-Freeman said.

Risk sentiment was also dampened after bomb blasts at hotels in Jakarta, although most analysts did not expect any lasting effect on markets.

"The blasts have added to this direction in terms of risk trades coming off," said Mitul Kotecha, head of FX strategy at Calyon in Hong Kong, but added it wasn't a big move.

Markets shrugged off euro zone trade data for May, which posted a surplus of 1.9 billion euros, slightly lower than forecasts for 2.7 billion euros..

Among perceived higher risk currencies, the Australian dollar fell 0.8 percent to $0.7990, while sterling fell 1 percent to $1.6286. (Reporting by Jessica Mortimer; editing by Chris Pizzey)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.