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Forex - Dollar knocked back after failing to clear key levels - UPDATE 1

Forex - Dollar gets lift from upbeat trio of economic data - UPDATE 2

China yuan revaluation won't cause sharp fall in forex deposits - PBOC

chocolat,
Thank you once again for all the posts....er hope I'm not trespassing on here...:-))

Well someone had to......just in from work, having watched cable climb inexorably most of the day, and unable to find an entry.
Obviously the only avenue left, short cable @ 311

In my humble opinion--cables going north- COT@100% nice trendbreak on 1hr chart and the return side of a "dish" bottom. Only a guess,would make a change for cable ,long from 250

Better close my short then.....+5, better than usual...lol!

Well I'm shorting it from 1.7304 at around 6pm last evening.

edit: Might find myself reversing that shortly ......... probably if it goes over 1.7320

Nice call hilary.

Back long@.305

It's yawnsville ahead of the ECB. There's more to be had out of shorting the Yen atm.

I'm going to stick my neck out here and say that I don't think the ECB will do anything about rates today, despite the recent huffing and puffing of Trichet. They've been sat on the fence for so long now that they're probably stuck to it.

Small short cable @ 309......bored at work..:-)

Bear in mind the usual warning!

Taken out for 0, what a waste, if only work didn't keep getting in the way..:-)

In case you missed it, the ECB raised rates to 2.25%

I can't get the hang of this long on cable, tipped out for -20.
Short cable @ 313, can't do any worse than the long..:-)

Yen suffers on rate view, focus on G7, U.S. jobs

Fri Dec 2, 2005 9:27 AM GMT

By Carolyn Cohn

LONDON, Dec 2 (Reuters) - The yen hovered near a 2-1/2-year low against the dollar and a record low versus the euro on Friday after a rise in euro zone interest rates highlighted the drag on the Japanese currency from near-zero rates in Japan.

The European Central Bank raised the key rate to 2.25 percent as expected on Thursday, triggering the euro's rise to an all-time high against the yen, though a tepid outlook for future tightening prompted selling versus the dollar.

ECB President Jean-Claude Trichet made clear the bank was in no rush to raise rates again, suggesting the dollar would keep its yield advantage in the near term.

Markets will be on alert for comments from Trichet and other central bankers and finance ministers as they assemble for a G7 meeting in London on Friday, while key U.S. employment data is also due.

"The dollar has been reacting to data in the last couple of days and the U.S. data should be strong today, but position-adjustment may take hold again next week," said Adam Myers, currency strategist at UBS.

"G7 may strengthen its comment to say greater flexibility is required, and there is a risk we see dollar/yen correct."

China attends the G7 meeting on Friday and Saturday and markets will watch for any hints on a further revaluation of the yuan. But G7 sources have told Reuters the language on currencies in the final communique, due on Saturday, will not change much from what was last said when they met in September.

Any sign that the G7 is putting pressure on China for more "flexibility" is likely to have a knock-on positive effect on the yen, often used as a proxy for China's currency.

The dollar rose as far as 120.71 yen, close to its highest levels since April 2003 set on Thursday, and was trading near the day's highs at 0854 GMT.

The euro hit a record high of 141.65 yen in overnight trade and was at 141.32 yen.

Against the dollar the euro was down 0.2 percent on the day at $1.17, under pressure following the ECB decision and news conference. The euro hit a two-year low around $1.1640 last month.

The Swedish crown hit 6-week highs against the euro following hawkish comments from the Swedish central bank after it left interest rates unchanged at historic lows of 1.50 percent.

With the ECB rate hike out of the way, dealers awaited monthly U.S. employment data due at 1330 GMT.

The median forecast in a Reuters poll is for the creation of 210,000 new jobs in November, after a rise of 56,000 in October.

Ahead of the G7 meeting, Trichet and fellow ECB Governing Council member Yves Mersch are speaking in Luxembourg, and U.S. Federal Reserve Chairman Alan Greenspan and UK Chancellor of the Exchequer Gordon Brown speak at a closed meeting in London.

Greenspan is also scheduled to deliver a pre-taped speech in Philadelphia at 1400 GMT.

"Greenspan is going to say something negative on external imbalances, as he did this time last year," said Myers.

Worries about the U.S. current account deficit took the dollar to record lows against the euro at the end of 2004.


JUICY U.S. YIELD

The dollar has capitalised on its yield advantage all year, climbing 18 percent against the yen and around 16 percent versus the euro. Meanwhile, the single currency has appreciated around 8 percent against the yen since early June.

The yen has suffered in particular because market participants do not see Japanese rates rising until at least the second half of next year, despite growing expectations the Bank of Japan will end its easy-money policy by mid-2006.

The U.S. fed funds rate is at 4 percent and widely expected to climb to 4.5 percent by early next year, while rates in Japan have been locked near zero for nearly five years.

BOJ Deputy Governor Toshiro Muto said on Friday the chances of a change in policy would increase from April but the central bank could take its time before implementing a further policy shift after that, reiterating earlier remarks by BOJ officials.

"Until yesterday, the market was watching the euro, but the focus is turning to how far the yen's weakening trend will continue," said Hideaki Furumaya, forex manager at Trust and Custody Services Bank in Tokyo.

He added that near-term weakness in the Japanese currency could be compounded by an exodus from the yen into other currencies as Japanese individual investors park their winter bonuses in higher-yielding assets overseas.

Hilary -thanks for the post,quite amazing that there is no reference at all to Sterling?Are we out of favour?

FOREX-Yen plumbs lows vs dollar, euro after G7
Mon Dec 5, 2005 9:28 AM GMT

By Veronica Brown

LONDON, Dec 5 (Reuters) - The yen sank to a 32-month low against the dollar and an all-time low versus the euro on Monday after Japanese officials signalled on the sidelines of a G7 meeting that they were unfazed by the currency's slide.

The yen was not a topic at the weekend meeting of finance ministers and central bankers from the world's leading economies, giving market players more reason to think that Group of Seven officials have no qualms about the currency's weakness.

Speculation had mounted that Japan may be getting nervous about the yen's widespread decline this year as investors have chased higher yields elsewhere, with the Bank of Japan seen keeping overnight rates near zero for an extended period.

But Finance Minister Sadakazu Tanigaki said after the G7 meeting that the yen's fall through 121 to the dollar reflected economic fundamentals, sticking to the ministry's script in signing off on currency moves. That comment was repeated on Monday by vice finance minister Koichi Hosokawa.

BOJ Governor Toshihiko Fukui said on Saturday the weaker yen was not a problem and was consistent with the central bank's policy of fostering growth.

"I think the themes pretty much remain the same, yen weakness and dollar strength now and then, but it really is a yen move. We still like the dollar overall until you see signs that the (U.S.) data is starting to slip. We're looking at more yen weakness in the early part of this week," Ian Gunner, head of foreign exchange research at Mellon Bank, said.

Big buying of foreign bonds by Japanese investors, combined with foreigners hedging their purchases of Tokyo shares to protect against a further yen drop, have helped drive the dollar up about 18 percent versus the yen this year.

By 0909 GMT, the dollar was trading around 121.11 yen, up 0.47 percent on the day. It climbed as high as 121.39 earlier, its loftiest since March 2003. The euro was last at 141.76 yen, fairly near the day's peak of 141.97 yen -- its highest since the single currency was launched in 1999.

The euro lost ground against the U.S. currency, slipping to $1.1708 from around $1.1720 in late New York trade on Friday, taking it closer to a two-year low of $1.1640.


BROAD YEN LOSS

Against other currencies, the yen also tumbled to new depths: a 13-year low against the Canadian dollar, eight-year lows versus the New Zealand and Australian dollars, and a seven-year low against the British pound.

A Bank of Japan index showed that through the first part of November, the yen hit a 20-year low on a trade-weighted and inflation-adjusted basis.

More pressure from the G7 put on Beijing to take more steps to loosen the yuan did little to help the yen, which speculators snapped up in the past as a proxy for when China would eventually let its currency appreciate.

China revalued the yuan on July 21 and now manages it against a currency basket, but since then the yuan has appreciated just 0.4 percent against the dollar. Beijing has said it would reform the exchange rate at its own pace.

"The bottom line is that, without a change in Japanese interest rates, it's difficult to buy the yen," said Tohru Sasaki, chief forex strategist at JPMorgan Chase Bank in Tokyo.

He added that the yen had the most to lose against the New Zealand and Australian dollars in the near term due to their particularly sweet rate advantages over the yen.

Australia's cash rate is 5.5 percent, while New Zealand's is widely expected to rise beyond the current 7 percent this week.


EURO ZONE GROWTH

The euro, meanwhile, was little changed by euro zone services growth data, which showed the sector grew at its fastest pace in 16 months in November.

The survey's headline Business Activity Index rose to 55.2 in November from October's 54.9, well above the 50 mark between growth and contraction and its highest level since July 2004. The index beat the consensus forecast of 54.8.

Mellon Bank's Gunner said euro/dollar was likely to move quietly this week with players reluctant to push the pair sharply down ahead of next week's Federal Open Markets Committee meeting on U.S. rates.

"Beyond that (Fed meeting) there's still a big risk of euro/dollar falling," he added.

Last week the European Central Bank raised rates for the first time in five years to 2.25 percent but has indicated there would not be an extended stretch of monetary tightening, limiting the euro's gains against the dollar.

By contrast, the Federal Reserve is poised to raise rates for a 13th straight time on Dec. 13, taking the fed funds rate to 4.25 percent. It is seen rising to at least 4.5 percent next year.

ECB Governing Council members Klaus Liebscher and Vitor Constancio are due to speak on Monday morning, while ECB president Jean-Claude Trichet is expected to attend the Euro Group of euro zone finance ministers in Brussels at 1700 GMT.

China yuan exchange reform will not trigger heavy dollar selling - UPDATE

Firstly, must thank the ladies for the briefings, always helpful, and informative..:-)

Despite the excitement of watching water running from the ceiling, and down lift shafts and stairs, as the result of a burst pipe 2 floors above, had to have a little dabble at cable, closed this mornings short for + 40, and ever the optimist, now have cable long from 326......usual warning applies..:-)

cable long stopped out for 0....still better than average!....well mine anyway..lol