Euro edges higher against dollar on Greece aid hopes

NEW YORK: The euro edged higher against the dollar in thin pre-holiday trade Wednesday as traders appeared optimistic a long-sought Greek aid deal was in reach.

The euro fetched $1.2826 at 2200 GMT, up from $1.2818 at the same time Tuesday.

Against the Japanese currency, the euro rose to 105.84 yen from 104.70 yen late Tuesday, while the dollar also climbed, to 82.51 yen from 81.67 yen.

"Despite the bumbling and fumbling of expected deadlines on Greece, the market continues to rally as if everything is on the up and up," said Neal Gilbert at GFT.

"It seems that nothing can keep the euro down at the moment as the French downgrade failed to do it earlier this week," he said, referring to Moody's removal of France's triple-A credit rating Monday.

European leaders insisted Wednesday that their imminent third attempt in as many weeks to unblock bailout funds for debt-stricken Greece will likely succeed, as Athens warned that the stability of the entire eurozone depended on it.

The eurozone is a "whisker" away from a deal to unblock the money aimed at keeping Greece from going bankrupt, French Finance Minister Pierre Moscovici said just hours after marathon talks on the aid package collapsed in Brussels.

Trading volume was weak as many traders left New York early to celebrate the Thanksgiving holiday Thursday, when all US markets are closed. Markets will reopen Friday for shortened sessions.

The dollar slipped to 0.9389 Swiss francs from 0.9398 francs late Tuesday and dipped a bit against the British pound, which bought $1.5949 compared with $1.5924 the prior day.

Dollar down, markets up in Asia after Obama win

HONG KONG: The dollar slipped in Asian trade on Wednesday, while share markets rose after President Barack Obama was re-elected in a knife-edge US presidential election.

As a hard-fought campaign came down to the wire Obama was declared winner after picking up crucial swing states, wiping away uncertainty that had pervaded markets for the past few days.

But in afternoon foreign exchange trade the greenback slipped against the euro and yen as dealers bet that under Obama the Federal Reserve would continue with the loose monetary policy that has seen it flood markets with billions of dollars.

The European single currency bought $1.2861 in Tokyo, well up from $1.2788 earlier Wednesday and $1.2814 in New York late Tuesday. The greenback was also at 80.05 yen compared with 80.34 yen in New York.

The greenback was also broadly lower against other Asia-Pacific currencies, including the Australian, Taiwan and Singapore dollars, and the Indian rupee.

A clear victory had been the overriding hope as it will now allow the government to move on fixing the austere "fiscal cliff" of tax hikes and spending cuts that sits on the horizon and could hammer the economy.

In afternoon trade Asian shares were higher.

Sydney gained 0.71 per cent, or 31.7 points, to end at 4,516.5, and in the afternoon Hong Kong rose 0.30 per cent, Seoul gained 0.33 per cent and Shanghai was up 0.16 per cent while Tokyo was flat.

"An Obama victory ensures the continuity of the US monetary policy, which is likely to be kept loose," SHK Financial strategist Daniel So told Dow Jones Newswires.

He added that a Romney win would likely see him "launch policies to incentivise fund flow back to the US, so in terms of liquidity inflow an Obama win also favours the Asian markets".

Wall Street ended with impressive gains ahead of the election results. The Dow rose 1.02 per cent, the S&P 500 climbed 0.79 per cent and the Nasdaq added 0.41 per cent.

However, regional traders were still concerned about Europe's debt woes, which were stoked on Tuesday after data showed a bigger-than-expected slump in factory orders in Germany, the eurozone's biggest economy.

Berlin said industrial orders declined 3.3 per cent in September from August after already falling 0.8 per cent the previous month.

That is much steeper than expected. Analysts polled by Dow Jones had been pencilling in a fall of 0.5 per cent.

The drop was largely due to a decline in export orders, particularly from the eurozone, where they plummeted 9.6 per cent.

Eyes are also on the upcoming 18th congress of the Chinese Communist Party that begins on Thursday and which will see the country's leaders for the next 10 years anointed.

Oil prices were lower, with New York's main contract, light sweet crude for delivery in December, down 29 cents to $88.42 a barrel and Brent North Sea crude for December delivery shedding 52 cents to $110.55.

Gold prices rose thanks to the weaker dollar, sitting at $1,710.40 by 0545 GMT compared with $1,679.75 late Monday.

Dollar rises against yen in Asia

TOKYO - The dollar rose against the yen in Asian trade on Friday, lifted by news that Japanese mobile carrier Softbank is in advanced talks on a multi-billion-dollar buyout deal with Sprint Nextel.

The dollar was at 78.45 yen in Tokyo trade against 78.33 yen in New York late Thursday.

The European common currency was changing hands at $1.2943 against $1.2926, while it firmed to 101.52 yen from 101.25 yen.

Softbank is eyeing a monster $25 billion buy-in to the US telecom market including the takeover of Sprint Nextel in what could be one of Japan Inc.'s biggest-ever overseas acquisition, reports said Friday.

Sprint Nextel said it was talking to Softbank on a possible takeover by Japan's third largest mobile carrier, while Softbank also confirmed on talks with the US firm but noted no decisions had been made yet.

"The way of financing varies," Daisuke Karakama, market economist at Mizuho Corporate Bank, told Dow Jones Newswires. "The firm may have some dollar holdings. Still, there should be dollar-buying to a certain extent."

Banks, asked by the telecom firm, will likely purchase dollars over a certain period of time, he added.

The dollar was also supported against the yen after Japanese finance minister Koriki Jojima expressed at the Group of Seven meeting in Tokyo concerns about the high levels of the currency, dealers said.

The direction of the single currency may well depend on the stock market's movement, said a senior dealer at a major Japanese bank, as risk appetite rose despite worries over Spain's path forward after another S&P ratings downgrade.

The Standard & Poor's downgrade of Spain seemed to have had little impact, despite the risk of rendering the country's debt burden unsustainable.

"You don't have to be too pessimistic about the euro," he said.

While the downgrade could hit Madrid's borrowing costs, the European Central Bank's promise to buy up the debt of troubled economies if they agree to accept certain conditions.

Euro falls below 95 yen for first time in over a decade

TOKYO: The euro hit fresh lows against the Japanese currency on Monday, falling below 95 yen for the first time in more than a decade.

The common currency, which has been under pressure over fears about the eurozone's fiscal problems, dipped as low as 94.91 yen in morning Asian trade -- its lowest level since November 2000 -- from 95.38 in New York trade on Friday.

The euro was also weak against the dollar, treading around two-year lows at US$1.2119, while the dollar bought 78.33 yen.

The Japanese currency, which hit record highs against the dollar last year, has been increasingly viewed as a safe-haven unit amid worries about Europe and a lumbering US economic recovery.

Officials in Tokyo have repeatedly warned that the yen was overvalued and have previously intervened in forex markets in a bid to bring down the soaring unit's value.

"My stance on foreign exchange is unchanged and will never change under any circumstance," Japanese Finance Minister Jun Azumi told reporters in Tokyo Monday, according to Dow Jones Newswires.

"As I've been saying, I will take decisive steps against speculative movement of excessive volatility. As far as the current situation is concerned, I'm watching it carefully," he added.

Money changers run out of Malaysian ringgit

SINGAPORE: Some money changers in Singapore on Friday ran out of Malaysian ringgit notes after the favourable exchange rate sparked strong interest from buyers taking the chance to stretch their dollar by picking up ringgit on the cheap.

The Singapore dollar is trading at one to 2.51 Malaysian ringgit, after hitting a 14-year high against the Malaysian currency this week.

The ringgit is under pressure as Malaysia's general election looms and as investors exit emerging Asian markets for safer assets.

Sim Moh Siong, a currency strategist at Bank of Singapore, said: "I think part of the under-performance could be due to the drop in commodity prices, especially in terms of crude oil and palm oil. That seems to be an overhang on the ringgit."

Currency analysts said the ringgit could weaken further this year, on risks from Malaysia's upcoming general election.

This could push the Singapore dollar to 2.55 versus the ringgit within the year, before moderating to 2.45 by end-2013.

Saktiandi Supaat, who is head of currency research at Maybank, said: "It's a reflection also of how market participants see Malaysian assets and also the tolerance level of Bank Negara in terms of allowing some flexibility in the ringgit.

"The ringgit has fluctuated or reacted more than the Singapore dollar to Eurozone and global risks such as growth issues. The structural issues on Singapore dollar restrict the way it reacts."

Global economic uncertainty has caused investors to pull money out of riskier assets like emerging-Asia currencies as they opt for safe haven assets like the US dollar.

The Singapore dollar has also been attracting these investors.

It has appreciated 2.5 per cent against the Thai baht and Indonesian rupiah this year.

Lee Chen Hoay, an investment analyst at Phillip Futures, said: "Because of the Eurozone crisis, it has increased the risk aversion in the market. And you even see things like Switzerland and Denmark being able to issue bonds at negative yield.

"So that means investors are willing to pay more money to get less, to protect their capital. And Singapore, being the only Southeast Asian currency with triple A, has an increased appeal."

Analysts said that should the Singapore dollar continue strengthening versus the ringgit, Singapore companies with operations in Malaysia could see profits take a hit.

However, Malaysian companies with operations in Singapore may see currency gains as they repatriate profits.

Don't get caught off guard by GBP

Amid the ongoing European debt crisis, the British pound has emerged as one of the unlikely safe-haven darlings for currency traders.

The pound has strengthened 3.4 per cent against the euro since the start of the year, and 7.4 per cent if measured from October last year.

To many traders, this is surprising, considering two major points.

First, Britain is going through its second recession in only three years.

Second, the Bank of England (BOE) has flooded the financial system with pounds through its quantitative-easing (QE) programme, to the tune of £325 billion (S$656 billion).

The main function of QE in any country is to lower yields by purchasing a large amount of securities (through expansion of the money supply).

Lower yields would then help to push interest rates down and, subsequently, boost lending.

All this is done in the hope that increased lending will give the economy a needed boost and, ultimately, stimulate growth.

With the unprecedented amount of cash injected by the BOE, coupled with the flight to safety of European traders and investors, it is not difficult to see why yields are at a record low.

In fact, according to the latest figures on British bonds - known as gilts - yields for 10-year gilts are already below 2 per cent, a record low.

In essence, the flow of funds from Europe is helping the BOE with another QE programme.

BOE is taking a hawkish tone for two reasons. First, the flow of funds from Europe actually "helps" BOE maintain its QE programme.

Second, inflation is still stubbornly high, although it is not being caused by stronger demand.

Although we see the pound strengthening in the currency market, we need to be mindful of the underlying factors behind the currency's strength.

In Britain's case, the strength of the pound is not due to fundamentals.

When we bear this in mind, we can be more prepared to take steps and short the currency should the tide turn unexpectedly.

Trade call 

Short EUR/GBP at 0.7995

EUR/GBP has been moving in a solid downtrend, clearing almost 400 pips since March 28.
On the hourly chart, prices are flirting with the "round" number of 0.8000.

This is a level not seen since November 2008. Going with momentum, our bias is for a short and we will make an entry when prices fall to 0.7995.

A stop loss of 45 pips is located above the Monday-morning gap because we do not expect prices to go above the gap again.

We will have two targets on this trade, exiting the final position at 0.7905.

Dollar up from historic low against yen

TOKYO: The dollar clawed back ground against the yen on Monday after hitting a historic low last week, as Tokyo upped its rhetoric over the domestic unit and indicated its willingness to intervene to stem its rise.

The dollar firmed to 76.62 yen in Tokyo morning trade from 76.50 yen in New York late Friday, after the greenback fell to a post-war low of 75.95.

The euro eased to $1.4380 from $1.4398. The European common currency was almost flat at 110.18 yen against 110.15 yen.

The dollar's slump on Friday beat its previous post-World War II low of 76.25, which it reached days after the March 11 earthquake and tsunami hit Japan.

The Japanese currency, seen as a safe-haven unit together with the Swiss franc, have attracted purchases amid deepening concern about faltering growth in the United States and the eurozone's debt crisis, dealers said.

Against the Swiss unit, the greenback firmed to 0.7866 francs from 0.7849 in New York.

The Swiss currency strengthened to 1.1308 per euro, compared with 1.1381 francs late Friday in Tokyo.

Local media reported over the weekend that Japanese authorities are ready to take action against a further surge in the yen, including market intervention to sell the unit.

The reports said the Japanese central bank is also considering further monetary easing.

Because a strong yen hurts Japanese exporters leading the nation's recovery from the impact of the March 11 earthquake and tsunami, Japan stepped into the foreign exchange market earlier this month to sell yen and buy dollars.

Tokyo has previously signalled that it may do so again.

Finance Minister Yoshihiko Noda stepped up his rhetoric Monday against the yen's rise. "I'm worried that recent one-sided yen moves have been strengthening," Noda said, according to Dow Jones Newswires.

"I will take decisive actions if necessary without excluding any possible measures, while watching even more closely if there are any speculative movements," he told reporters.

"Investors remain jittery following media reports about the authorities' possible countermeasures," against the strong yen, said Tomohiro Ishikawa, dealer at Chuo Mitsui Trust and Banking.

"While they are cautious about the Japanese authorities' stance, the dollar's underlying weakness is unlikely to be reversed" ahead of Federal Reserve Chairman Ben Bernanke's speech later this week, Ishikawa said.

The dollar came under renewed pressure after the Fed pledged earlier this month to hold interest rates near zero for two more years to counter an economy facing increased risks of stalling.

With attention on Bernanke's speech at the Fed's annual symposium in Jackson Hole Friday, Credit Agricole said it believes "there is currently a high hurdle for QE3 and therefore another measure to promote stronger economic recovery is more likely."