Reuters: US Dollar Report: FOREX-Canadian dollar skids; yen still in the doldrums

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-Canadian dollar skids; yen still in the doldrums Oct 21st 2012, 22:48 Sun Oct 21, 2012 6:48pm EDT * Loonie hits two-month lows following tame inflation * BOJ easing view seen keeping yen's upside capped * Euro/dollar expected to stay range bound for now By Ian Chua SYDNEY, Oct 22 (Reuters) - The Canadian dollar stood out from the crowd on Monday, falling to a two-month low as the market positioned for a more dovish Bank of Canada in the wake of tame inflation numbers, while the yen stayed under pressure amid more policy easing expectations. The U.S. dollar bought C$0.9949 in early Asian dealings, rising to its best level since Aug. 23. The Australian dollar was at C$1.0247, having hit a five-week high of C$1.0268 on Friday. Data last Friday showed Canadian inflation remained tame in September at 1.2 percent, providing little justification for the Bank of Canada to maintain a hawkish bias when it sets interest rates on Tuesday. The head of the central bank surprised last week when he dropped a tightening bias. There are also growing expectations of more policy stimulus from the Bank of Japan when it meets next week, which kept the yen under pressure. Traders said any easing will make the yen more attractive as a funding currency for carry trades. The dollar bought 79.27 yen, not far off a high of 79.47 set last week, a level not seen since Aug. 21. The euro fetched 103.15 yen, having on Friday hit five-month highs around 104.15. Signalling the bank's readiness to expand monetary stimulus further, the BOJ governor said on Friday that slowing overseas growth is weighing on business sentiment and may hurt now-resilient capital spending. Some analysts, however, remained sceptical that the BOJ will deliver any major action at its Oct. 30 meeting and warned about holding long dollar/yen positions. "There is a lot of hope there they will do something big. History is sadly a poor lead and it would be prudent to pare down these long USDJPY positions early and maintain a strategy of buying on dips," said Sebastien Galy, strategist at Societe Generale. Meanwhile, euro/dollar remained stuck in a range and traders expect the currency pair to stay that way until either Spain requests for a bailout or following next month's U.S. Presidential elections, where the focus could then shift to dollar-negative factors such as the U.S. fiscal problems. The euro traded at $1.3019, having retreated from a high of $1.3140 last week. It was seen stuck in a $1.2800/3200 range for now. The Australian dollar was similarly hemmed in, with buying support emerging below $1.0200 and selling interests coming in above $1.0400. It last stood at $1.0315. Aussie dollar bulls are also likely to be wary of getting too carried away ahead of Wednesday's inflation report, where another tame number will no doubt bolster expectations of a November rate cut. Shane Oliver, head of investment strategy at AMP Capital, said the near-term outlook for the Aussie was messy with uncertainty over the economic slowdown in China and ongoing expectations for rate cuts negative for the currency. "The likely outcome is for a volatile range of between $0.9500/1.1000, with the risk on the downside," he said. 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