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

REFILE-FOREX-Dollar back on defensive; Aussie hits 14-mth high

Published 10/12/2009, 10:54 PM
INTC
-
IBM
-
GC
-
CL
-

(Corrects para 2 to say ... "shone", ... not "shined")

* NZD lifted by better-than-expected retail numbers

* Investors continue to shift to high-yielders, commodities

* Focus on 3rd qtr U.S. earnings

By Kaori Kaneko

TOKYO, Oct 13 (Reuters) - The U.S. dollar shifted back to the defensive on Tuesday and the Aussie hit a 14-month high as investors added to long positions in high-yielding currencies on expectations that robust U.S. corporate earnings would sustain risk appetite.

The New Zealand dollar also shone, hovering not far from a 14-month high, after retail sales data for August beat expectations and fuelled talk the central bank there might soon drop its explicit easing bias..

But overall activity was subdued in Asia as investors largely stayed on the sidelines ahead of a series of U.S. earnings, dealers said.

"It seems like the dollar is getting some respite from its fall against the yen but higher-yielding currencies remain strong and the general tone of the market still points towards dollar weakness," said Kazuyuki Kato, treasury department manager at Mizuho Trust & Banking.

"Investors are still shifting funds into higher-yielding currencies and commodities," he said.

The dollar edged up 0.1 percent to 89.90 yen from late U.S. trading on Monday when the U.S. currency rose to as high as 90.47 yen with stops being triggered around 90.30 yen and sellers lining up around 90.50 levels.

The dollar index was steady at 76.185, not far from a 14-month low of 75.767 struck on Oct. 8.

The greenback received a brief reprieve late last week and early on Monday on hopes that U.S. interest rates would move up earlier than expected.

But those expectations fizzled out and investors refocused on U.S. corporate earnings which, if they beat expectations, could boost appetite for high-yielding currencies, analysts say.

Some investors sell the U.S. dollar when economic optimism grows, buying assets like stocks and commodities instead.

The Australian dollar was steady at $0.9077 after rising as high as $0.9096, its highest since August 2008.

The New Zealand dollar was holding firm at $0.7375, after touching $0.7395.

"Contrary to its current promise to keep the cash rate at its current level until late 2010, we suspect the central bank (in New Zealand) will, albeit reluctantly, begin a tightening cycle by second quarter of next year," said Su-lin Ong, senior economist at RBC Capital.

U.S. crude oil futures edged down but were holding firm on Tuesday after settling at a seven-week high above $73 a barrel the previous day, while gold was hovering not far from record high.

The euro was little changed at $1.4768, having gained 0.35 percent on Monday, with resistance seen around $1.4815. On the yen, the euro was also steady at 132.74 yen. Some of the big corporate names scheduled to post earnings this week are Intel Corp and Johnson & Johnson on Tuesday, JP Morgan Chase on Wednesday, and Goldman Sachs and IBM on Thursday.

U.S. economic data this week includes September retail sales and consumer prices as well as industrial and manufacturing numbers. On Tuesday, Federal Reserve Bank of New York President William Dudley speaks at 1715 GMT while Fed Vice President Donald Kohn speaks on the economic outlook at 1745 GMT. (Additional reporting by Anirban Nag in Sydney; Editing by Joseph Radford)

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.