Dollar stays weak as it hits new 15-year yen low

A money dealer calls an order at a foreign exchange market in Tokyo.

Photo: AFP

TOKYO - The dollar stayed weak against the yen in Asia on Thursday after it hit a new 15-year low amid expectations of additional monetary easing by the US Federal Reserve, dealers said.

The dollar fetched 82.87 yen in Tokyo trade, close to a new 15-year low of 82.75 yen hit briefly in New York on Wednesday and near the level at which Japan carried out its first intervention since 2004 in September.

The euro was trading at 1.3930, hardly changed from 1.3928 in New York late Wednesday. It slipped to 115.39 yen from 115.58.

The greenback also fell to 29.88 Thai baht from 29.94 Wednesday, after Thailand's currency strengthened beyond 30 baht to the dollar for the first time in more than 13 years.

The unit, which has appreciated around 10 percent this year, roared past the psychologically important level, fanning concerns over the key export sector.

"The basic trend is dollar selling on the expected credit easing... The market is now sensitive to any negative news on the US economy," said Yasuyuki Takeuchi, dealer at Mitsubishi UFJ Trust and Banking.

The dollar came under new pressure in New York Wednesday after a report from payrolls firm ADP showed an unexpected drop in private sector jobs in September, highlighting concerns about the lagging economic recovery.

The data fuelled concerns that a closely watched government survey on non-farm payrolls for September due Friday may also indicate weakness.

The markets increasingly expect the US Federal Reserve to pump more money into the system to boost the flagging economy, even if doing so weakens the dollar and risks stoking inflation.

The dollar resisted further falls from the low hit in New York on speculation of further Japanese intervention, but some players believe Tokyo cannot move before a Group of Seven (G7) meeting starting Friday, dealers said.

"Some players are feeling safe (about pushing the dollar lower) as they believe Japan's intervention would at best be a solo move" with other countries also wanting to keep their currencies low to promote exports, Takeuchi said.

Finance ministers and central bank governors from the G7 economic powers are to hold two-day talks in Washington starting Friday.

Satoshi Tate, senior dealer at Mizuho Corporate Bank, told Dow Jones Newswires earlier that the dollar may fall as low as to 82.30 later Thursday.

If Japan intervenes, the dollar may rise to 85.50 but otherwise the upside would be limited around 83.50 Thursday, he said.

The dollar was mixed against other Asian currencies.

It fell to 1,115.40 South Korean won from 1,119.00, to 1.3074 Singaporean dollars from 1.3097 and to 43.46 Philippine pesos from 43.50.

The dollar firmed to 30.76 Taiwan dollars from 30.74 and to 8,922.50 Indonesian rupiah from 8,920.00.

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Asia stocks hit 2-year high, dollar rises vs yen

Photo: Reuters

HONG KONG - Asian stocks shot to a two-year high on Monday, boosted by interest in emerging markets, while the dollar edged up after last week's selloff though speculation the Federal Reserve will add to money supply was still rife.

European stocks were between half a percent and 1 percent lower in early dealings, with the benchmark FTSEEurofirst 300 down 0.75 percent, extending a five-day retreat.

The dollar remained close to an eight-month low against a basket of major currencies, with expectations increasing the Fed will resort to a second round of bond purchases before the year is over to support the US economy.

By contrast, Chinese manufacturing activity has held up surprisingly well, keeping investors confident about the region's prospects and pushing up the MSCI index of Asian stocks outside Japan to the highest level since June 2008.

"Continued foreign buying, amid the US dollar's recent weakness and an increasing preference for emerging market stocks, has lifted the market to a new high," said Lee Jin-woo, a market analyst at Mirae Asset Securities in Seoul.

Strong foreign portfolio flows into the region have lifted Asian currencies, putting pressure on regional central banks to step up intervention to limit the inflow of speculative "hot money" and to support their export-oriented economies.

Financial leaders gather for the International Monetary Fund meeting this week and the concept of countries keeping their currencies weak for export-gain is likely to be a hot topic.

Japan's Nikkei closed 0.3 percent lower in choppy trade ahead of a Bank of Japan policy decision on Tuesday.

The dollar surged against the yen in a short-covering rally as the Japanese currency retreated against other currencies as investors unwound some long yen positions ahead of the BOJ meeting.

Central banks on tap this week

Former BOJ Deputy Governor Toshiro Muto said on Friday the central bank may ease policy as inaction would run the risk of spurring further yen gains, given the prospects for easing by the US Federal Reserve.

Traders are not expecting the BOJ to make a substantial change to policy but may hold off on big bets on the yen ahead of central bank meetings in Britain and the euro zone on Thursday, as well as the September US payrolls report on Friday.

"Nervous trade will likely continue this week, even after tomorrow's event, as US jobs data is also set to be released later in the week," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

The MSCI index of Asia Pacific shares outside Japan, which has risen for six consecutive weeks, was up 1.1 percent with a 2.3 percent gain in the energy sector leading the pack on the back of firm crude prices.

Hong Kong's Hang Seng index led regional exchanges, rising 1.4 percent, with oil-related stocks such as CNOOC Ltd providing the most support to the market.

Petrochina Co., the world's second-most valuable oil and gas producer, was up 3.7 percent in Hong Kong.

US crude futures were steady near a two-month high at $81 a barrel, having risen $5 in the past week on the dollar's weakness and as a strong revival in Chinese manufacturing by a mid-year lull appeared to soothe fears of a new downturn in the global economy.

The dollar looked vulnerable against a basket of currencies, hovering near Friday's eight-month low, but had edged up 0.2 percent against a basket of currencies in Asian trade.

"It's still a dollar-negative situation but short-term probably the market has priced a lot in," said Masafumi Yamamoto, chief FX strategist Japan at Barclays Capital.

Asian currencies, such as the South Korean won and Taiwanese dollar, climbed against the dollar, despite an estimated $18.8 billion spent by regional central banks last week to keep their currencies weak, according to estimates from traders compiled by IFR Markets.

The potential of significant amount of cheap money being added to the financial system via the Federal Reserve continued to support gold prices.

The precious metal was up 0.2 percent to $1,317.55 an ounce, after hitting a fresh record of $1,320.80 on Friday on sustained dollar weakness.

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Dollar weak, gold peaks as Fed, BOJ action eyed

Photo: AFP

HONG KONG - The dollar hit an eight-month low, driving gold to a record high, on rising expectations the Federal Reserve will act again to help the struggling economy while new evidence of China's robust health lifted European stocks.

Europe's major equity markets rose on Wednesday, with the pan-European FTSEurofirst 300 index of top shares up 0.6 percent in early trade, making up for Tuesday's decline, spurred by news of a dip in US consumer confidence.

Gold rose as the Fed and Bank of Japan look to pump more funds into markets via bond purchases and other measures to help their struggling economies.

"The backdrop for the dollar continues to deteriorate," JPMorgan said, advising clients to seize any bounce in the dollar as a chance to sell.

"The increased focus on QE and the break of several key dollar support levels maintained the overall bearish bias."

Japanese government bond futures hit a seven-year high while US Treasury yield curve moved on Tuesday to its flattest since early September over expectations of further monetary easing by both central banks.

Such expectations were reinforced by a fall in US consumer confidence to its lowest since February and a worsening outlook in Bank of Japan's quarterly tankan survey of major companies.

Stock markets, however, found support in a rise in HSBC's China Purchasing Managers' index to a five-month high in September, which pointed to renewed, though moderate, momentum in China's vast industrial sector.

Asian stocks outside Japan rose 0.6 percent, poised for their biggest monthly gain since July 2009, up 11.8 percent, in what is historically one of the worst months for stocks.

Japan's Nikkei closed up 0.7 percent, helped by quarter-end window dressing and expectations that the BOJ will respond to the worsened outlook from Japanese manufacturers by further easing its policy when it meets on Oct. 4-5.

The closely watched tankan survey showed confidence improved for a sixth straight quarter but firms turned negative on the outlook, possibly a sign of growing concerns that a strong yen could derail the fragile economic recovery.

Waiting for the Fed

The dollar index dipped to as low as 78.856, the lowest since early February, hurt by recent speculation that the US Federal Reserve may embark on a second round of quantitative easing later this year.

The weak dollar pushed gold to an all-time high and silver to a 30-year high as ETF holdings hit another record.

Gold rose to $1,310.10 an ounce -- its eighth record-high session this month.

US consumer confidence fell to its lowest level in seven months, the latest in a series in data that give a mixed signal on the economy, with unemployment levels at 26-year highs and access to credit still tight.

The Federal Reserve said last week it was prepared to put more money into the economy, if needed, to stimulate the recovery and avoid deflation.

The Fed is probably preparing a fresh round of quantitative easing measures to announce at the end of its Nov. 2-3 meeting, hedge fund adviser Medley Global Advisors said in a report on Tuesday, a market source told Reuters.

The Wall Street Journal reported that the Fed is also weighing a more open-ended, smaller-scale bond buying program.

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Dollar weak, gold peaks as Fed, BOJ action eyed

Photo: AFP

HONG KONG - The dollar hit an eight-month low, driving gold to a record high, on rising expectations the Federal Reserve will act again to help the struggling economy while new evidence of China's robust health lifted European stocks.

Europe's major equity markets rose on Wednesday, with the pan-European FTSEurofirst 300 index of top shares up 0.6 percent in early trade, making up for Tuesday's decline, spurred by news of a dip in US consumer confidence.

Gold rose as the Fed and Bank of Japan look to pump more funds into markets via bond purchases and other measures to help their struggling economies.

"The backdrop for the dollar continues to deteriorate," JPMorgan said, advising clients to seize any bounce in the dollar as a chance to sell.

"The increased focus on QE and the break of several key dollar support levels maintained the overall bearish bias."

Japanese government bond futures hit a seven-year high while US Treasury yield curve moved on Tuesday to its flattest since early September over expectations of further monetary easing by both central banks.

Such expectations were reinforced by a fall in US consumer confidence to its lowest since February and a worsening outlook in Bank of Japan's quarterly tankan survey of major companies.

Stock markets, however, found support in a rise in HSBC's China Purchasing Managers' index to a five-month high in September, which pointed to renewed, though moderate, momentum in China's vast industrial sector.

Asian stocks outside Japan rose 0.6 percent, poised for their biggest monthly gain since July 2009, up 11.8 percent, in what is historically one of the worst months for stocks.

Japan's Nikkei closed up 0.7 percent, helped by quarter-end window dressing and expectations that the BOJ will respond to the worsened outlook from Japanese manufacturers by further easing its policy when it meets on Oct. 4-5.

The closely watched tankan survey showed confidence improved for a sixth straight quarter but firms turned negative on the outlook, possibly a sign of growing concerns that a strong yen could derail the fragile economic recovery.

Waiting for the Fed

The dollar index dipped to as low as 78.856, the lowest since early February, hurt by recent speculation that the US Federal Reserve may embark on a second round of quantitative easing later this year.

The weak dollar pushed gold to an all-time high and silver to a 30-year high as ETF holdings hit another record.

Gold rose to $1,310.10 an ounce -- its eighth record-high session this month.

US consumer confidence fell to its lowest level in seven months, the latest in a series in data that give a mixed signal on the economy, with unemployment levels at 26-year highs and access to credit still tight.

The Federal Reserve said last week it was prepared to put more money into the economy, if needed, to stimulate the recovery and avoid deflation.

The Fed is probably preparing a fresh round of quantitative easing measures to announce at the end of its Nov. 2-3 meeting, hedge fund adviser Medley Global Advisors said in a report on Tuesday, a market source told Reuters.

The Wall Street Journal reported that the Fed is also weighing a more open-ended, smaller-scale bond buying program.

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Gold hits new record above $1,290

Photo: AFP

LONDON - Gold hit a fresh record above US$1,290 on Wednesday as the dollar sank after the US Federal Reserve hinted at more stimulus spending if the tepid US economic recovery cools further.

The metal jumped to $1,293.35 an ounce on the London Bullion Market, after breaching $1,290 late Tuesday.

"A combination of a weakening dollar and the Federal Reserve indicating it may loosen monetary policy further is pushing gold to record highs," ETX Capital senior trader Manoj Ladwa told AFP.

"While some are calling for it to run out of steam around the $1,300 level, the momentum still clearly remains to the upside."

The Federal Reserve said Tuesday that it was prepared to take new stimulus measures if necessary to keep the US economy on track while leaving interest rates at record lows.

The news sent the dollar reeling against the euro and the yen.

A weak dollar stimulates demand for dollar-priced gold, which becomes cheaper for buyers using stronger currencies. In turn, that tends to push prices higher.

CMC Markets analyst Michael Hewson predicted that gold would eventually reach $1,300.

"Perceptions that the Fed will look to further ease monetary policy into year-end will underpin gold and help push it above $1,300 as investors seek better stores of value," Hewson said.

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Gold hits new record above $1,290

Photo: AFP

LONDON - Gold hit a fresh record above US$1,290 on Wednesday as the dollar sank after the US Federal Reserve hinted at more stimulus spending if the tepid US economic recovery cools further.

The metal jumped to $1,293.35 an ounce on the London Bullion Market, after breaching $1,290 late Tuesday.

"A combination of a weakening dollar and the Federal Reserve indicating it may loosen monetary policy further is pushing gold to record highs," ETX Capital senior trader Manoj Ladwa told AFP.

"While some are calling for it to run out of steam around the $1,300 level, the momentum still clearly remains to the upside."

The Federal Reserve said Tuesday that it was prepared to take new stimulus measures if necessary to keep the US economy on track while leaving interest rates at record lows.

The news sent the dollar reeling against the euro and the yen.

A weak dollar stimulates demand for dollar-priced gold, which becomes cheaper for buyers using stronger currencies. In turn, that tends to push prices higher.

CMC Markets analyst Michael Hewson predicted that gold would eventually reach $1,300.

"Perceptions that the Fed will look to further ease monetary policy into year-end will underpin gold and help push it above $1,300 as investors seek better stores of value," Hewson said.

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