USD
The U.S. Dollar rebounded versus most major rivals except the Japanese Yen Thursday, benefiting from safe-haven flows amid fears of a potential sovereign debt default by Dubai. Dubai's shock move on Wednesday to restructure its biggest corporate debtor, Dubai World, and delay repayment on some of the company's $59 billion in liabilities, dented risk appetite across asset markets on Thursday, to the U.S Dollar's benefit.
Against the Japanese Yen the greenback headed for its worst month since December before a report next week that economists say will show U.S. business activity has declined, supporting the case for the Federal Reserve to keep borrowing costs near zero. The U.S. currency traded at $1.4945 per EUR from $1.5019 yesterday.
However the Dollar edged up from its lows against the Yen in early trading Friday as renewed risk aversion prompted investors to shed riskier assets, giving pause to broad Dollar selling. Market players also refrained from re-testing lows on the Dollar as trade thinned for the U.S. Thanksgiving holiday.
But the Dollar-bearish sentiment remained intact on views U.S. interest rates would stay low for some time and on pressure for the dollar to weaken to correct the U.S.' imbalances.
EUR
The European currency declined sharply in holiday-thinned trade on Thursday as renewed risk aversion prompted investors to shed riskier assets. The EUR hovered near the day's low of $1.4960 down 1.1% for the day. The currency also hit a near 2-month low against the Japanese Yen at 129.52 yen.
The EUR extended losses as ratings agency Standard & Poor's put the credit ratings of four Dubai banks on negative outlook and stock market losses reached 3%. The negative outlook for the banks is due to their exposure to Dubai World, which is seeking a debt standstill. The Dubai World story has weighed heavily on stocks all day, prompting traders to cut back their dollar-funded positions.
The British Pound trimmed early losses but remained 1.4% lower versus the U.S dollar at $1.64. The Sterling also slid 0.4% vs. the EUR to 90.93 pence. Concerns about U.K. bank exposure to Dubai weighed on the Pound, analysts said. There are concerns with regard to the extent of the U.K. banking sector exposure in Dubai which is weighing on Sterling. The underlying picture for Sterling was already fundamentally weak and this news further adds to the bearish sentiment.
JPY
The Japanese Yen strengthened to a 14-year high against the U.S Dollar, rising past 85.00 to the greenback on speculation renewed risk aversion will enhance the allure of the Japanese currency as a refuge.
The Yen climbed as high as 85.83 per Dollar, the strongest since July 1995, before trading at 85.20 from 86.59 yesterday. The currency advanced to 128.87 per EUR from 130.03, after hitting 126.91, the highest since April 29.
Japan's currency did pare some of its earlier gains after Japan's Finance Minister told reporters in Tokyo he will contact authorities in the U.S. and Europe about currencies if necessary. Shizuka Kamei, Japan's financial services minister, also urged an international response to halt the rise in the country's currency. The market showed paid attention to the warning from the government today and bought back the USD. However the impact of verbal intervention may not last long unless the government takes actual action analysts said.
kishore
The U.S. Dollar rebounded versus most major rivals except the Japanese Yen Thursday, benefiting from safe-haven flows amid fears of a potential sovereign debt default by Dubai. Dubai's shock move on Wednesday to restructure its biggest corporate debtor, Dubai World, and delay repayment on some of the company's $59 billion in liabilities, dented risk appetite across asset markets on Thursday, to the U.S Dollar's benefit.
Against the Japanese Yen the greenback headed for its worst month since December before a report next week that economists say will show U.S. business activity has declined, supporting the case for the Federal Reserve to keep borrowing costs near zero. The U.S. currency traded at $1.4945 per EUR from $1.5019 yesterday.
However the Dollar edged up from its lows against the Yen in early trading Friday as renewed risk aversion prompted investors to shed riskier assets, giving pause to broad Dollar selling. Market players also refrained from re-testing lows on the Dollar as trade thinned for the U.S. Thanksgiving holiday.
But the Dollar-bearish sentiment remained intact on views U.S. interest rates would stay low for some time and on pressure for the dollar to weaken to correct the U.S.' imbalances.
EUR
The European currency declined sharply in holiday-thinned trade on Thursday as renewed risk aversion prompted investors to shed riskier assets. The EUR hovered near the day's low of $1.4960 down 1.1% for the day. The currency also hit a near 2-month low against the Japanese Yen at 129.52 yen.
The EUR extended losses as ratings agency Standard & Poor's put the credit ratings of four Dubai banks on negative outlook and stock market losses reached 3%. The negative outlook for the banks is due to their exposure to Dubai World, which is seeking a debt standstill. The Dubai World story has weighed heavily on stocks all day, prompting traders to cut back their dollar-funded positions.
The British Pound trimmed early losses but remained 1.4% lower versus the U.S dollar at $1.64. The Sterling also slid 0.4% vs. the EUR to 90.93 pence. Concerns about U.K. bank exposure to Dubai weighed on the Pound, analysts said. There are concerns with regard to the extent of the U.K. banking sector exposure in Dubai which is weighing on Sterling. The underlying picture for Sterling was already fundamentally weak and this news further adds to the bearish sentiment.
JPY
The Japanese Yen strengthened to a 14-year high against the U.S Dollar, rising past 85.00 to the greenback on speculation renewed risk aversion will enhance the allure of the Japanese currency as a refuge.
The Yen climbed as high as 85.83 per Dollar, the strongest since July 1995, before trading at 85.20 from 86.59 yesterday. The currency advanced to 128.87 per EUR from 130.03, after hitting 126.91, the highest since April 29.
Japan's currency did pare some of its earlier gains after Japan's Finance Minister told reporters in Tokyo he will contact authorities in the U.S. and Europe about currencies if necessary. Shizuka Kamei, Japan's financial services minister, also urged an international response to halt the rise in the country's currency. The market showed paid attention to the warning from the government today and bought back the USD. However the impact of verbal intervention may not last long unless the government takes actual action analysts said.
kishore
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