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Dollar Falls as G-7 Leaders Refrain From Criticizing Weakness
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By Bo Nielsen and Yoshiaki Nohara
Oct. 5 (Bloomberg) -- The dollar fell against the euro for a second day after Group of Seven finance chiefs refrained from calling for measures to stop the U.S. currency’s decline.
The dollar, down 7.3 percent against Canada’s dollar and 10 percent against Norway’s krone in the past three months, dropped further after the G-7 repeated its statement that “disorderly” swings in currencies would harm “economic and financial stability.” The yen pared earlier gains against the dollar as Japanese Finance Minister Hirohisa Fujii said the government will intervene if the yen moves in a “biased direction.”
“It looks like the G-7 is willing to tolerate dollar weakness for now,” said Geoffrey Yu, a London-based currency strategist at UBS AG. “That means people will take the dollar down to see what the real tolerance levels are.”
The dollar fell to $1.4618 per euro at 10:56 a.m. in London, from $1.4576 on Oct. 2 in New York. It fell to a one- year low of $1.4844 on Sept. 23. Against the Canadian dollar, the U.S. currency depreciated to C$1.0759, from C$1.0760, and slid to 5.7702 Norwegian kroner, from 5.7986.
The yen depreciated to 131.46 per euro, from 130.90, and was at 89.91 per dollar, from 89.81 at the end of last week.
Policy makers from France to Canada signaled concern at the Istanbul summit that a sliding dollar risks impeding their recoveries from recession. Traders were bracing for stronger language to arrest the slump in the U.S. currency, which has dropped 10 percent against a basket of six currencies since the end of March.
‘Encouraged’ Dollar Selling
“Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” G-7 officials said in a statement after talks on Oct. 3, repeating language they used in April.
“The financial markets appear to have been encouraged into selling the dollar again by the lack of rhetoric in support of the dollar,” Derek Halpenny, European head of global currency research in London at Bank of Tokyo-Mitsubishi UFJ Ltd., wrote in a report today. “No foreign-exchange policy is manageable without policy to back it up.”
A weaker dollar risks hurting economies outside the U.S. by making the exports of companies such as Japan’s Canon Inc. more expensive. The Dollar Index, which tracks the greenback against the currencies of six trading partners including the euro and the yen, lost 0.2 percent to 76.849 today.
Aussie Gains
The G-7’s stance was consistent with an aim to rebalance global demand, which is positive for “higher-beta currencies,” Morgan Stanley analysts Sophia Drossos and Stewart Newnham wrote in a report today.
Australia’s dollar gained 1.1 percent to 87.37 U.S. cents, from 86.52, and was little changed against the New Zealand dollar after the country’s performance of services index rose 1.3 points to 49.3. The figure is just short of the 50 level separating expansion from contraction. Commonwealth Bank of Australia and the Australian Industry Group released the figure in Sydney today.
New Zealand’s currency is “going to be weaker relative to the Australian dollar” in the coming 18 months, Finance Minister Bill English said in a Bloomberg interview during a visit to Hong Kong. “They’ve got a stronger growth outlook, their interest rates are likely to rise sooner.”
The yen retreated against most of the major counterparts after Japan’s Fujii issued his clearest warning yet that his nation is open to intervening in the currency market.
“If currencies show some excessive moves in a biased direction, we will take action,” Fujii said after the G-7 meeting. He declined to say if the yen is trading in such a way.
Position Shifted
Fujii’s position has shifted since his initial remarks on taking office in September. He formerly opposed seeking a “weak” yen. The currency last week rose to an eight-month high of 88.24 against the dollar, threatening exporters’ profits.
Stocks and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors, Nouriel Roubini, who predicted the financial crisis, said in an Oct. 3 interview in Istanbul.
“Markets have gone up too much, too soon, too fast,” Roubini said, “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V- shaped, but more like U-shaped.”
The European Central Bank will keep its main refinancing rate unchanged at 1 percent at the Oct. 8 meeting, according to all 53 economists surveyed by Bloomberg.
“The ECB is likely to leave rates unchanged this week,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. “Given Europe’s rate advantage over that in the U.S., the euro will probably be bolstered.”
Share | Email | Print | A A A
By Bo Nielsen and Yoshiaki Nohara
Oct. 5 (Bloomberg) -- The dollar fell against the euro for a second day after Group of Seven finance chiefs refrained from calling for measures to stop the U.S. currency’s decline.
The dollar, down 7.3 percent against Canada’s dollar and 10 percent against Norway’s krone in the past three months, dropped further after the G-7 repeated its statement that “disorderly” swings in currencies would harm “economic and financial stability.” The yen pared earlier gains against the dollar as Japanese Finance Minister Hirohisa Fujii said the government will intervene if the yen moves in a “biased direction.”
“It looks like the G-7 is willing to tolerate dollar weakness for now,” said Geoffrey Yu, a London-based currency strategist at UBS AG. “That means people will take the dollar down to see what the real tolerance levels are.”
The dollar fell to $1.4618 per euro at 10:56 a.m. in London, from $1.4576 on Oct. 2 in New York. It fell to a one- year low of $1.4844 on Sept. 23. Against the Canadian dollar, the U.S. currency depreciated to C$1.0759, from C$1.0760, and slid to 5.7702 Norwegian kroner, from 5.7986.
The yen depreciated to 131.46 per euro, from 130.90, and was at 89.91 per dollar, from 89.81 at the end of last week.
Policy makers from France to Canada signaled concern at the Istanbul summit that a sliding dollar risks impeding their recoveries from recession. Traders were bracing for stronger language to arrest the slump in the U.S. currency, which has dropped 10 percent against a basket of six currencies since the end of March.
‘Encouraged’ Dollar Selling
“Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” G-7 officials said in a statement after talks on Oct. 3, repeating language they used in April.
“The financial markets appear to have been encouraged into selling the dollar again by the lack of rhetoric in support of the dollar,” Derek Halpenny, European head of global currency research in London at Bank of Tokyo-Mitsubishi UFJ Ltd., wrote in a report today. “No foreign-exchange policy is manageable without policy to back it up.”
A weaker dollar risks hurting economies outside the U.S. by making the exports of companies such as Japan’s Canon Inc. more expensive. The Dollar Index, which tracks the greenback against the currencies of six trading partners including the euro and the yen, lost 0.2 percent to 76.849 today.
Aussie Gains
The G-7’s stance was consistent with an aim to rebalance global demand, which is positive for “higher-beta currencies,” Morgan Stanley analysts Sophia Drossos and Stewart Newnham wrote in a report today.
Australia’s dollar gained 1.1 percent to 87.37 U.S. cents, from 86.52, and was little changed against the New Zealand dollar after the country’s performance of services index rose 1.3 points to 49.3. The figure is just short of the 50 level separating expansion from contraction. Commonwealth Bank of Australia and the Australian Industry Group released the figure in Sydney today.
New Zealand’s currency is “going to be weaker relative to the Australian dollar” in the coming 18 months, Finance Minister Bill English said in a Bloomberg interview during a visit to Hong Kong. “They’ve got a stronger growth outlook, their interest rates are likely to rise sooner.”
The yen retreated against most of the major counterparts after Japan’s Fujii issued his clearest warning yet that his nation is open to intervening in the currency market.
“If currencies show some excessive moves in a biased direction, we will take action,” Fujii said after the G-7 meeting. He declined to say if the yen is trading in such a way.
Position Shifted
Fujii’s position has shifted since his initial remarks on taking office in September. He formerly opposed seeking a “weak” yen. The currency last week rose to an eight-month high of 88.24 against the dollar, threatening exporters’ profits.
Stocks and commodity markets may drop in coming months as the gradual pace of the economic recovery disappoints investors, Nouriel Roubini, who predicted the financial crisis, said in an Oct. 3 interview in Istanbul.
“Markets have gone up too much, too soon, too fast,” Roubini said, “I see the risk of a correction, especially when the markets now realize that the recovery is not rapid and V- shaped, but more like U-shaped.”
The European Central Bank will keep its main refinancing rate unchanged at 1 percent at the Oct. 8 meeting, according to all 53 economists surveyed by Bloomberg.
“The ECB is likely to leave rates unchanged this week,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. “Given Europe’s rate advantage over that in the U.S., the euro will probably be bolstered.”
wallstreet1928
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wallstreet1928
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i am short Nasdaq 1673 ..stop loss 1698
target 1650
target 1650
Last edited:
Mr. G
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WS - 125 pt stop for a 23 pt target. Not sure I like that risk/reward ratio.....
The other way around I'd take it
wallstreet1928
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WS - 125 pt stop for a 23 pt target. Not sure I like that risk/reward ratio.....
The other way around I'd take it
haha...sorry my friend spelling mistake, at work doing day job so i have to update very quickly
wallstreet1928
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Oil
LIQUIDATE, LIQUIDATE, LIQUIDATE
as mentioned earlier
how far down can we go ?
wallstreet1928
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wallstreet1928
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wallstreet1928
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amended to break even chaps
Mr. G
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WS - even with the typo you still have a r/r at about 1-1. Is that your normal approach?
SabreTT
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barc lost some support at 360 I think
wallstreet1928
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yes my friend
I am not good enough to have 1 - 2 .........unfortunately!!
There are many more traders better than me
Down she goes as I expected
wallstreet1928
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OIl is just looking for a reason to sell off
excitement post ISM data...beautiful entry!!
market very weak today
wallstreet1928
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SP500 will find support at 1028 in the interim, but wont last long
wallstreet1928
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amended to break even ................target should be hit soon
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