Reuters: US Dollar Report: FOREX-Euro slips but cushioned by Fed easing hopes

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

FOREX-Euro slips but cushioned by Fed easing hopes Sep 10th 2012, 02:35 Sun Sep 9, 2012 10:35pm EDT * Euro near four-month highs vs USD * Resistance at 200-day moving average near $1.2838 * Aussie dollar not far off Friday's two-week peak By Masayuki Kitano and Ian Chua SINGAPORE/SYDNEY, Sept 10 (Reuters) - The euro fell against the dollar on Monday but still held near a four-month high, after weak U.S. jobs data fanned speculation that the Federal Reserve would launch more monetary stimulus this week. The common currency, already bolstered by the European Central Bank's plan to help lower borrowing costs for stressed members, dipped 0.2 percent from late U.S. trade on Friday to$1.2790. The euro managed to hold on to much of its gains from Friday, when it climbed to as high as $1.2818 on trading platform EBS, its strongest level in nearly four months. The euro's downside will probably be limited going into the Fed's two-day policy meeting that ends on Thursday, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. "The market seems to be completely looking for QE," he said, referring to quantitative easing, the Fed bond-buying programme, a third round of which markets expect will be announced after the meeting. If the Fed were to announce QE3 bond purchases this week, and Germany's constitutional court backs the euro zone's permanent bailout fund in a ruling due on Wednesday, the euro may rise towards $1.30, Okagawa said. That won't mean clear sailing ahead for the single currency, however, with investors likely to continue to focus on developments in Greece and Spain, he added. "We may see a false dawn, so to speak, and a rise to around $1.30," he said. "But if you ask whether that will lead to a full-blown change in trend, I think that might be difficult," Okagawa said. Traders said the fact that the euro has climbed above its June high around $1.2750 was technically bullish for the euro. "You might get an acceleration if we do get QE3," said Andrew Robinson, FX analyst for Saxo Capital Markets in Singapore, referring to the euro's outlook. Possible resistance levels include the euro's 200-day moving average that now comes in near $1.2838 and levels near $1.2995, a low hit back in mid-April that had previously been a support level and will now be viewed as resistance, Robinson said. DOLLAR UNDER PRESSURE The dollar index, which measures the dollar's value against a basket of currencies, stood at 80.272, stuck near a four-month low of 80.151 hit on Friday after data showed U.S. jobs growth slowed sharply in August. In a Reuters poll conducted after the jobs numbers, economists saw a 60 percent chance of the Fed embarking on QE3 this week, compared with the 45 percent chance seen in a late August poll. More stimulus from the Fed would make it attractive for investors to use the U.S. dollar as a funding currency to buy higher yielding assets in carry trades. The expectations of Fed easing lent support to the Australian dollar, which hit a two-week high just above $1.0400 on Friday. Remarkably, the Aussie dollar has retraced 50 percent of its early-August-to-early-September fall within two sessions. It was last down 0.1 percent at $1.0373. The U.S. dollar eased 0.1 percent versus the yen to 78.24 yen, hovering near a one-month low around 78.02 yen hit on Friday. Japanese authorities may start stepping up their rhetoric against the yen's rise versus the dollar, if the dollar were to drop below 77.90 yen, a low hit in early August, said SMBC's Okagawa, adding that such jawboning may help to curb the dollar's drop versus the yen. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions