Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

FOREX-Dlr, yen gain on lower stocks, earnings concerns

Published 07/10/2009, 07:18 AM
Updated 07/10/2009, 07:24 AM
SOGN
-

* Euro falls roughly 1 percent vs dollar, yen

* Market watching stocks, U.S. earnings for direction

* SNB to stick "decidedly" to preventing franc rise - Roth

* ECB starts covered bond purchases slowly

(Adds quotes, updates prices)

By Naomi Tajitsu

LONDON, July 10 (Reuters) - The dollar rose broadly and the yen hovered near the week's peaks against other major currencies on Friday on investor caution as the U.S. corporate earnings season began and share prices fell.

The yen hit a five-month high against the dollar this week and surged to two-month highs against the euro and Australian dollar as investors unwound bets in riskier assets that they made using the low-yielding Japanese currency.

It lost a chunk of those gains on Thursday but then held its ground as the other currencies lost momentum and S&P stock futures signalled a weak start to Wall Street later.

"It's back to the risk aversion story, in which the dollar and yen gain," said Christian Lawrence, currency strategist at RBC Capital Markets.

The yen gained in particular this week as the dollar's reserve currency status came under scrutiny, although reaction was muted to calls from China for a review of the reserve currency system at a meeting of world leaders on Thursday.

By 1059 GMT, the euro was 0.9 percent lower at $1.3897. The common currency was down 1.1 percent against the yen at 128.90 yen.

European shares were down 0.8 percent.

The dollar index, which tracks performance against a basket of six major currencies, was up 0.7 percent at 80.429.

The dollar was down 0.2 percent at 92.74 yen.

SWISSIE EYED

Analysts said that data earlier this week showed that speculators are holding the most short positions in the dollar since before the collapse of Lehman Brothers in autumn, which had sparked massive risk aversion and dollar demand.

Peter Frank, currency strategist at Societe Generale in London, said this accumulation of shorts may be a warning sign that a shift back into long positions may be imminent, as optimism fades about improvements in the global economy.

"Speculators are still positioned for risk appetite, but the market is going the other way," he said.

He added that traders may be looking for opportunities to flip those positions, and that further losses in equities, oil and commodities may trigger a hefty rise in the dollar.

The European Central Bank and euro zone national central banks bought 23 million euros' worth of covered bonds under the 60 billion euro programme launched this week, the ECB said on Friday. The programme is aimed at boosting lending to stimulate the ailing economy.

The Swiss franc edged lower after Swiss central bank chief Jean-Pierre Roth said in an interview published on Friday the Swiss National Bank was sticking "decidedly" to its policy to prevent an appreciation of the Swiss franc.

The dollar gained 1.0 percent on the day to 1.0908 Swiss francs while the euro rose 0.3 percent to 1.5165 francs.

Sterling fell 0.8 percent on the day to $1.6205, relinquishing gains made on Thursday in part after the Bank of England surprised markets by not using the remaining 25 billion pounds available under the current asset-buying programme.

The central bank has said it will review the programme in August when it releases new quarterly forecasts.

(Additional reporting by Tamawa Desai; Editing by Ron Askew)

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.