Reuters: US Dollar Report: FOREX-Euro inches up, market positions for Jackson Hole

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FOREX-Euro inches up, market positions for Jackson Hole Aug 30th 2012, 11:46 Tweet Share this Email Print Thu Aug 30, 2012 7:46am EDT * Euro edges up vs dollar ahead of Bernanke speech, ECB * Market waits to see if Fed hints at more easing * China concerns push Australian dollar to 1-month low * Little impact on yen from Japanese political standoff By Jessica Mortimer LONDON, Aug 30 (Reuters) - The euro edged higher against the dollar on Thursday as investors waited to see if U.S. Federal Reserve Chairman Ben Bernanke delivers firmer hints on more monetary easing at a meeting of central bankers on Friday. Any signal from Bernanke when he speaks at Jackson Hole, Wyoming, that the U.S. central bank will embark on another asset buying programme would weigh broadly on the dollar. This would give an additional boost to the euro, which has been buoyed recently by expectations the European Central Bank will unveil concrete plans next week to help bring down crippling borrowing costs in Spain and Italy. The euro was up 0.1 percent at $1.2547, within sight of last week's high of $1.2590, which roughly coincides with its 100-day moving average. A rise above $1.2590 would mark the euro's strongest level in eight weeks. However, its rise was limited due to uncertainties about Fed policy, with recent improvements in U.S. economic data marginally reducing the chances of more quantitative easing (QE). "The risk with Jackson Hole is that unless there is further strong signals of more easing, the market will take it as a disappointment," said Christian Lawrence, currency strategist at Rabobank, adding that this would be positive for the dollar. "The bar is quite high and if there is any paring back of talk of QE the market is likely to react more because it is more or less expecting it." The euro was also lifted after Chinese Premier Wen Jiabao was quoted by state news agency Xinhua as saying China is to continue to buy EU government bonds after fully assessing risks. The single currency showed little reaction to Italy selling 7 billion euros of government debt with ease. CHINA CONCERNS Growing concerns about growth limited investors' appetite for taking on risk as a flagging Chinese economy looked to be curbing demand for commodities such as steel, iron ore and copper. This weighed in particular on higher-yielding and commodity-linked currencies like the Australian dollar, which fell to a one-month low of $1.0318. It traded very close to its 200-day moving average at $1.0311 and technical analysts said a break below there could deepen its losses. The Australian dollar was last down 0.2 percent at $1.0329. "The currency is holding up well compared with where commodity prices are going. The carry you could achieve being long Aussie is still good and there are not many other AAA-rated assets left," said Geoff Kendrick, FX strategist at Nomura. "I am telling people to be bearish Aussie on the crosses, but to be outright short Aussie you need to wait for Bernanke tomorrow and also get more clarification on China." The yen stayed within its recent range against the dollar, showing little reaction after Japan's opposition-controlled upper house passed a censure motion against Prime Minister Yoshihiko Noda the previous day. The dollar dipped 0.1 percent to 78.61 yen while the euro was steady at 98.65 yen. The censure is non-binding but effectively means that Japan's opposition will stop cooperating with the government on most bills. Analysts said the political wrangling is unlikely to have too much impact on the yen, as ruling and opposition parties are likely to eventually hash out a compromise. Tweet this Link this Share this Digg this Email Reprints Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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