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Stocks hit 8-month high, dollar bounces back
NEW YORK (Reuters) - World stocks touched an eight-month high on Tuesday, while the dollar rebounded from the previous day's losses a day after the Federal Reserve signaled it would continue its loose monetary policy.
The U.S. dollar strengthened against the euro and the yen after Fed Chairman Ben Bernanke's dovish comments sent it tumbling in the previous session.
U.S. stocks were little changed after a more than 1 percent rally lifted the S&P 500 to a four-year high on Monday.
"Bernanke yesterday talked about the need for aggressive monetary policy and the dollar took a pretty good whack, so it's probably clawing some of that back," said Art Hogan, managing director of Lazard Capital Markets in New York.
Bernanke said Monday accommodative monetary policy would stay in place to support demand and, over time, drive down long-term unemployment. He stopped short of signaling the start of a new round of asset purchases by the Fed.
The S&P 500 is on track to close its best quarter since 2009 and its fourth straight month of gains. MSCI's main global stock index (.MIWD00000PUS) was up 0.2 percent after hitting its highest level since August 1.
"Last week markets tried to price in a global economic slowdown but we're now seeing a slowdown, but not one that is unexpected," Hogan said. "We still believe there's a soft landing in China, Europe has stabilized and the U.S. continues to chug along at a sustainable rate."
In morning trading, the Dow Jones industrial average (DJI:^DJI - News) dipped 4.80 points, or 0.04 percent, to 13,236.83. The S&P 500 Index (.INX) shed 0.14 point, or 0.01 percent, to 1,416.37. The Nasdaq Composite (NAS:^COMP) gained 4.30 points, or 0.14 percent, to 3,126.87.
The pan-European FTSEurofirst 300 (FSI:^E3X) fell 0.5 percent, while U.S. dollar-denominated Nikkei futures jumped 1.2 percent.
A private sector report showed U.S. consumer confidence dipped in March but was nearly in line with forecasts, while inflation expectations rose to the highest in 10 months.
U.S. Treasuries prices added slight gains after the data, with the 10-year yield again below its 200-day average and at its lowest in two weeks.
The benchmark 10-year U.S. Treasury note was up 13/32, with the yield at 2.2068 percent.
Lower yields contributed to record-setting dollar amounts of U.S. corporate note and bond sales this quarter.
With four days left, data from Thomson Reuters unit IFR show $274.5 billion were priced in investment grade deals, eclipsing the previous record for a first quarter of $272.3 billion in 2007 -before the credit crisis.
This is the best quarter ever for high yield deals. At $88 billion, the amount beats the previous record of $85.3 billion set in the last quarter of 2010.
Mar 27, 2012 15:36
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Dollar gains, snapping two day drop versus euro
NEW YORK (Reuters) - The dollar gained against the euro on Tuesday, snapping two straight sessions of losses as data tempered concerns of more stimulus from the Federal Reserve.
The greenback's rally came a day after comments from Federal Reserve Chairman Ben Bernanke raised expectations that the Fed could yet embark on a third round of quantitative easing.
On Monday, Bernanke said "further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies." He made those comments to the National Association for Business Economics.
Until markets have more clarity on the Fed's plans, though, trading could stay constrained, analysts said.
"From our perspective, people are misinterpreting the Bernanke speech," said Mark McCormick, a G10 currency strategist with Brown Brothers Harriman in New York.
"I think people have taken it as sign of quantitative easing coming down the line, but I think that exaggerates the key takeaway," he added, with Bernanke not necessarily signaling more QE.
The euro slid 0.2 percent to $1.3334 in New York on Tuesday.
A U.S. report showed home prices were unchanged in January from December, the first time since July the seasonally adjusted S&P/Case-Shiller 20-city index has not declined and a sign that the battered housing market is slowly stabilizing.
A report from industry group The Conference Board showed the index of consumer attitudes eased to 70.2 from an upwardly revised 71.6 the month before, roughly in line with economists' expectations for 70.3.
The details of the report were mixed as consumer expectations fell, but their assessment of their current situation rose to the highest level since September 2008.
"The economy is doing a lot better than many people thought, and the market is going to run with that, but the Fed will not stand around while U.S. yields back up significantly," said Neil Mellor, currency strategist at Bank of New York Mellon in London.
"There will be a cat-and-mouse game between the market and Bernanke. I think the dollar will be in a range for some time."
The euro zone's sovereign debt crisis could still weigh on the single currency, as well.
While Germany signaled for the first time on Monday its willingness to increase the resources available for tackling the euro-zone debt crisis, several key events remain this week.
Those include a meeting of euro-zone finance ministers in Copenhagen on Friday and Saturday and Spain's budget presentation on Friday.
The meeting of finance ministers "could result in some near- term volatility," said Omer Esiner, chief market analyst with Commonwealth Foreign Exchange in Washington, D.C. "It's hard to push the euro up further from these levels without some catalyst."
YEN STEADIES AFTER DROP
Traders and analysts said moves in U.S. Treasuries would be key for the dollar. If demand for Treasuries gained steam and bond yields fell in the wake of Bernanke's comments, the dollar could face more pressure.
The greenback was up 0.4 percent against the yen at 83.15 yen, though below a recent 11-month high. Against Japan's yen, the single currency rose 0.2 percent to 110.86 yen.
The Japanese currency was seen as vulnerable to more selling, and has been under heavy pressure since Japan announced monetary easing measures last month.
With the fiscal year ending on March 31, which is Saturday, expected repatriation flows have done little to support the yen so far, said Joe Manimbo, a market analyst with Western Union Business Solutions in Washington, D.C.
"That suggests next week the yen could come under pressure, since it didn't benefit from expected month- and year-end flows," he added.
Mar 27, 2012 17:22
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Gold slips 1 percent as dollar strengthens
LONDON (Reuters) - Gold prices slid more than 1 percent on Thursday as a break higher in the dollar and a drop in oil prices pushed gold through key support near the $1,655 an ounce level, prompting further liquidation.
Spot gold was down 0.6 percent at $1,652.84 an ounce at 1508 GMT, off a low as $1,647.29 an ounce. The metal is on track for a third session of losses after a rally early in the week, sparked by Federal Reserve hints that accommodative monetary policy is set to persist, petered out.
"We have a forecast for an average price for the year of $1,450, so we are not surprised that gold prices are struggling to go higher," Nic Brown, head of commodity research at Natixis, said. "We think as time goes on the likelihood is that prices will probably soften further."
Gains in the dollar exerted strong pressure on gold. The euro fell against the U.S. unit as concerns about contagion from the euro zone debt crisis resurfaced ahead of Spain's budget on Friday. A stronger dollar tends to weigh on gold, which is priced in the U.S. currency. (FRX/)
Oil prices fell nearly $2 a barrel, European shares slipped and safe-haven German bunds inched higher, suggesting little appetite for assets seen as higher risk. A broadly successful sale of Italian bonds did little to soothe worries over the euro zone crisis.(GVD/EUR)
Gold is likely to need significant fresh support from a move in the wider financial markets, as well as a drop in the dollar, to push it to fresh highs, analysts said.
"We have suspected that it would take much more than a pure dollar correction for sustained gains to $1,700 and beyond, especially now that bullion is strongly correlated to the broader equity market, and risk sentiment in general," VTB Capital said in a note.
"It comes as little surprise, with the VIX volatility index - the global risk gauge - rallying to 2.5-week highs, that gold followed other precious metals with the broader market back in risk averse mode."
SUBSTANTIAL SUPPORT
Physical demand for gold among key Asian buyers was mixed.
"In the near-term there is substantial support still coming out of China. Until Chinese investors have a solid alternative to precious metal, it's likely that demand coming out of China will remain very strong," said Natixis' Brown.
But gold demand from India, the world's biggest buyer of the yellow metal, remains muted as jewelers' protests entered their thirteenth day, dealers said.
"If you see a significant decline in Indian demand for gold, that is a major negative for the gold market," Brown said.
U.S. gold futures for June delivery were down $5.30 an ounce at $1,655.20.
Swiss bank UBS cut its 2012 gold price forecast to $1,680 an ounce from $2,050 previously, which it said partly reflects the metal's performance in the first quarter.
"The view that the U.S. economic recovery is looking more sustainable is becoming increasingly accepted," it said. "As acute macro stresses abate, investors are looking at other asset classes and to the growth story once again. Gold is moving off the
centre-stage position it occupied for most of last year."
Nonetheless, the threat of a fresh downturn in the U.S. economy and of further credit stress, as well as ongoing official sector buying, higher oil prices and the low interest rate environment, will still underpin gold, it added.
Silver was down 0.7 percent at $31.78 an ounce. The gold/silver ratio, or the number of silver ounces needed to buy an ounce of gold, rose back towards 52, near a two-month high.
Spot platinum was down 0.3 percent at $1,625.70 an ounce, while palladium was down 0.1 percent at $641.97.
Mar 29, 2012 15:17
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Euro drops, yen rises; Spanish budget ahead
NEW YORK (Reuters) - The euro slid against the dollar and the yen on Thursday as investors dumped the single currency, nervous about Spain's budget presentation at the end of the week and ongoing concerns about the euro-zone sovereign debt crisis.
The single currency has declined steadily in recent sessions after touching a near four-week high earlier this week on comments from U.S. Federal Reserve Chairman Ben Bernanke, who indicated supportive monetary policy will remain in place.
But with several key risk events for the euro zone in the next few days, investors are squaring positions, said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank in New York.
"We've had a few good days for the euro," he said.
With a broader bias to sell euros still pervading the market, investors are now booking profits on some of those advances, he added.
The euro fell 0.3 percent to $1.3273 and touched its lowest since in three sessions in earlier trade.
Events in the next few days include Spain's budget presentation, which will show how far the government will tighten its belt, and a meeting of euro-zone finance ministers, where policymakers are expected to increase the combined lending ceiling of their two bailout funds.
Spain's budget "is a very dicey game," said Karl Schamotta, senior markets strategist with Western Union Business Solutions in Calgary.
An austere document could spur relief in bond markets.
"However, the reality is that that will slow growth and cause problems for them down the road," he said. "If the budget is on the softer side, we could see bond markets capitulating and participants concerned that we are not seeing enough resolve."
For trading, that means volatility ahead, Schamotta said.
Italian and Spanish bond yields were already rising on Thursday despite a broadly successful sale of Italian bonds, as investors switched into low-risk German debt.
Focus on the euro-zone bailout fund's size increased after European Central Bank governing council member Jens Weidmann, who is also the Bundesbank chief, warned that raising the firewall around stricken euro-zone members would only buy time.
Traders said automatic, stop-loss sell orders were triggered on the euro's break below $1.33 after the European Commission's economic sentiment index dipped by 0.1 percent, with sentiment in industry becoming markedly worse.
Analysts said the euro was unlikely to break out of its recent range of roughly $1.30 to $1.35.
YEN RISES BROADLY
The euro fell 0.9 percent on the day to 109.27 yen. The Japanese currency gained broadly on demand linked to the end of Japan's financial year and as European and U.S. equity markets followed Asian bourses into negative territory.
Wednesday was the last day for spot trading in Japan's business year that will end on March 31. But real-money flows from Tokyo kept major currencies under pressure against the yen, with exporters selling the dollar in large amounts, market players said.
The dollar fell 0.66 percent to 82.30 yen and touched a near three-week low, triggering reported stop-loss orders on the break of 82.35/40. But many strategists said the dollar should reassert itself against the yen as long as upcoming U.S. data does not support a recent rise in concerns about growth.
"There's definitely a lot of month-end and quarter-end rebalancing, but the bigger story we are seeing is some bond buying and equity selling in the last 24 hours," said Geoff Kendrick, currency strategist at Nomura.
The growth-linked Australian dollar fell 0.5 percent to USD$1.0339, hurt by concerns about slower growth in China.
Mar 29, 2012 16:10
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Euro slides versus dollar, yen on European manufacturing
NEW YORK (Reuters) - The euro slid against the dollar and yen on Monday as weak European manufacturing data prompted investors to compare the outlook for the euro zone with the improving economy.
The euro remained vulnerable to renewed bouts of selling after the regional manufacturing survey, analysts said, as investors took a cautious view of prospects for the global economy even after strong Chinese factory data.
A report on business activity in the U.S. manufacturing sector came in above the consensus forecast further contrasting the U.S. against the euro zone.
"PMIs out of Europe are another reminder of the extent economies have gone down," said Omer Esiner, chief market analyst with Commonwealth Foreign Exchange in Washington, D.C. "Strong U.S. data this week is likely to see the dollar strengthen on rising yield appeal."
The euro fell 0.3 percent against the dollar to $1.3311, though still within a cent of the recent one-month high of $1.3385, according to Reuters data. Analysts said that peak will provide resistance after the euro has repeatedly failed to breach it.
Traders said negative sentiment towards euro zone assets arose on reports the Bundesbank would not accept the bonds of several countries, including Portugal, as collateral. Germany's central bank later denied the reports.
"There's an increasing risk of a more prolonged recession in Europe and economic fundamentals argue in favor of a further downward adjustment in the euro," said Lee Hardman, currency analyst at BTM-UFJ in London.
YEN GAINS
The low-yielding yen, which tends to fall when risk appetite increases, recouped earlier losses, with the dollar down 0.9 percent at 82.09 yen and the euro down 1.1 percent at 109.26 yen.
"It seems like investors remain cautious with service sector data from China still to come this week and nothing to indicate an imminent policy response from the Chinese to the slowdown in their economy," said Valentin Marinov, head of European G10 currency strategy at Citi in London.
"It's a week ahead of the long weekend with thin liquidity, making investors reluctant to express strong views and which limits the scope for meaningful returns ahead of Easter."
The Japanese currency was undermined by a weaker-than-expected reading of the Tankan survey of sentiment at big Japanese manufacturers, which put the spotlight on whether the Bank of Japan will ease monetary policy further as early as next week.
The Australian dollar was up around 0.8 percent for the day at $1.0416, though off a high of $1.0449 touched earlier in the global session.
The currency tends to benefit from any signs of improvement in the Chinese economy due to Australia's strong trade links with the country. But many analysts have recently expressed concerns it is overvalued.
"The Chinese recovery is modest ... We like to sell Aussie on any rally," said George Saravelos, G10 currency strategist at Deutsche Bank in London.
Apr 02, 2012 16:03
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A look at the unemployment rates in the eurozone
A glance at the various rates of unemployment across the 17-nation eurozone
Eurostat, the EU's statistics office, estimates that unemployment across the 17-country eurozone rose to 10.8 percent in February, a new record since the euro launched in 1999.
Here's how the countries compare:
Spain 23.6 percent
Greece 21.0 percent+
Portugal 15.0 percent
Ireland 14.7 percent
Slovakia 14.0 percent
Estonia 11.7 percent+
France 10.0 percent
Cyprus 9.7 percent
Italy 9.3 percent
Slovenia 8.7 percent
Finland 7.4 percent
Belgium 7.2 percent
Malta 6.8 percent
Germany 5.7 percent
Luxembourg 5.2 percent
Netherlands 4.9 percent
Austria 4.2 percent
Apr 02, 2012 16:40
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http://theforexeye.com/images/octafx_newsupdates.pngOctaFX.Com - IMF chief against any breakup of EurozoneIMF managing director does not want to see weaker European countries split from EurozoneWASHINGTON (AP) -- The managing director of the International Monetary Fund says her global lending organization wants the Eurozone to stay together, not be broken up by the departure of some of its weaker nations.Christine Lagarde told the annual meeting of The Associated Press that the IMF has no agenda "to breakup that zone."There has been talk that Greece, one of the 17 nations that use the euro, might at some point leave. Lagarde was asked if such countries, even Spain and Italy, might be better off outside the zone."To your question, I think the answer is no," she said.Apr 03, 2012 16:07OctaFX.Com News Updates
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OctaFX.Com -Dollar dips versus euro ahead of Fed minutes, ECB
NEW YORK (Reuters) - The dollar slipped against the euro ahead of the release of U.S. Federal Reserve meeting minutes on Tuesday, though investors were reluctant to make big bets a day ahead of the European Central Bank meeting.
At least for the next few hours, the market focus in pre-Easter trade remains the Fed's meeting minutes from March which may provide clues on U.S. policymakers' inclination to take further steps to ease policy, which would weigh on the dollar.
For now, the minutes are expected to suggest a standby approach, with the Fed likely to warn that premature tightening would be risky, while keeping an open-minded, but uncommitted view on further easing.
Fed officials on Monday signaled little appetite for further monetary steps to stimulate U.S. growth in an economy that is gradually strengthening. However, Fed Chairman Ben Bernanke said last week that more stimulus would remain an option.
The ECB policy meeting is on Wednesday with analysts saying a hawkish message from the bank on the need to get back to concentrating on quelling inflation instead of helping Europe's economy and financial system out of crisis may give the euro a brief boost.
"We get a peek at the Fed minutes but (are) not expecting any surprises there," said John Doyle, currency strategist at Tempus Consulting in Washington. "After that we are holding for the Europeans."
The euro was last trading up 0.1 percent at $1.3337, with the session low at $1.3298 and the session peak at $1.3367.
Analysts said the gains in the shared currency came after investors failed to push the unit below $1.3300 and hold it there, forcing anyone betting against the euro
to step back in to buy to prevent further losses.
ON HOLD
To be sure, many investors are still looking to sell the euro as concerns grew about a fragile outlook for the euro zone and high debt levels in Spain. Italian and Spanish debt yields rose on Tuesday amid concerns about the euro zone's ability to keep budget deficits under control.
Spain's public debt ratio is expected to hit 79.8 percent of gross domestic product in 2012, a document detailing the country's 2012 budget showed on Tuesday.
Since the euro's mid- to late-March rally from $1.3000 to just below $1.34 fizzled out, the currency has stayed in a relatively tight $1.3250-$1.3400 range. Many analysts expect it to move lower if it breaks below that area.
The euro was last little changed against the Swiss franc at 1.2031 francs, but still near a two-month low as traders pushed the shared currency closer to the 1.20 franc floor set by the Swiss National Bank last year.
YEN SWINGS
Against the yen, the dollar was last up 0.1 percent at 82.18 yen, recovering from a drop to a low at 81.54 yen, its weakest since March 9.
Analysts said the broader trend for the yen to weaken remains intact following the Bank of Japan's unexpected easing of monetary policy in February. Speculation that the Fed could tighten its own policy faster than previously expected - and raise the return for holding dollars - have also weighed on the Japanese currency.
"People have been buying into the idea that the yen could weaken and perhaps we have seen the strongest period for the yen," said Dag Muller, technical analyst at SEB in Stockholm. "But in the near term, the yen could succumb to more of a correction from short-term exaggerated levels."
The Australian dollar was down 0.4 percent at US$1.0366, cutting earlier gains, after the Reserve Bank of Australia kept interest rates unchanged at 4.25 percent and suggested a bias toward easing.
Apr 03, 2012 16:19
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OctaFX.Com -Dollar rises against euro ahead of Fed minutes
Dollar rises against euro as traders await Federal Reserve minutes of March meeting
NEW YORK (AP) -- The dollar is rising against the euro before the release of the Federal Reserve's minutes from its March meeting.Traders are waiting to see whether the Fed is optimistic about the economy.
The Fed said in a statement after the meeting that it expects the job market to improve. The statement boosted the dollar.
But last week, Fed Chairman Ben Bernanke warned that the job market is still weak, pushing the dollar lower against the euro. Traders had interpreted the comments to mean that the Fed will keep short-term interest rates near zero. Lower interest rates tend to weigh on a currency by reducing the returns investors get from holding it.
Apr 03, 2012 16:43
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OctaFX.Com - The Basics Of Currency Trading
The investment markets can quickly take the money of investors who believe that trading is easy. Trading in any investment market is exceedingly difficult, but success first comes with education and practice. So, what is currency trading and is it right for you?
SEE: Top 7 Questions About Currency Trading Answered.
The currency market, or forex (FX), is the largest investment market in the world. Each day, it accounts for roughly $1.5 trillion of daily trading compared to only $25 billion of daily volume on the New York Stock Exchange (NYSE). The market may be large, but until recently the volume came from professional traders, but as currency trading platforms have improved more retail traders have found forex to be suitable for their investment goals.
How Does It Work?
Currency trading is a 24-hour market that is only closed from Friday evening to Sunday evening, but the 24-hour trading sessions are misleading. There are three sessions that include the European, Asian and United States trading sessions. Although there is some overlap in the sessions, the main currencies in each market are traded mostly during those market hours. This means that certain currency pairs will have more volume during certain sessions. Traders who stay with pairs based on the dollar will find the most volume in the U.S. trading session.
Currency is traded in various sized lots. The micro lot is 1,000 units of a currency. If your account is funded in U.S. dollars, a micro lot represents $1,000 of your base currency, the dollar. A mini lot is 10,000 units of your base currency and a standard lot is 100,000 units.
Pairs and Pips
All currency trading is done in pairs. Unlike the stock market, where you can buy or sell a single stock, you have to buy one currency and sell another currency in the forex market. Next, nearly all currencies are priced out to the fourth decimal point. A pip or percentage in point, is the smallest increment of trade. One pip typically equals 1/100 of 1%.
Retail or beginning traders often trade currency in micro lots, because one pip in a micro lot represents only a 10 cents move in the price. This makes losses easier to manage if a trade doesn't produce the intended results. In a mini lot, one pip equals $1 and that same one pip in a standard lot equals $10. Some currencies move as much as 100 pips or more in a single trading session making the potential losses to the small investor much more manageable by trading in micro or mini lots.
Far Less Products
The majority of the volume in currency trading is confined to only 18 currency pairs compared to the thousands of stocks that are available in the global equity markets. Although there are other traded pairs outside of the 18, the eight currencies most often traded are the U.S. dollar (USD), Canadian dollar (CAD), euro (EUR), British pound (GBP), Swiss franc (CHF), New Zealand dollar (NZD), Australian dollar (AUD) and the Japanese yen (JPY). Although nobody would say that currency trading is easy, having far less trading options makes trade and portfolio management an easier task.
What Moves Currency?
An increasing amount of stock traders are taking interest in the currency markets because many of the forces that move the stock market also move the currency market. One of the largest is supply and demand. When the world needs more dollars, the value of the dollar increases and when there are too many circulating, the price drops.
Other factors like interest rates, new economic data from the largest countries and geopolitical tensions, are just a few of the events that may affect currency prices.
The Bottom Line
Much like anything in the investing market, learning about currency trading is easy but finding the winning trading strategies takes a lot of practice. Most forex brokers will allow you to open a free virtual account that allows you to trade with virtual money until you find strategies that work for you.
Apr 05, 2012 15:43
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