Euro Drops Against Major Peers Before Spain Debt Auctions

The euro fell to less than .30 for the first time in two months as Spanish bond yields touched a 2012 high after a minister called on the European Central Bank to do more to stem debt-market turmoil.

The 17-nation currency dropped for a second day against the yen and reached the lowest since 2010 versus the pound. The yen strengthened against all of its 16 most-traded counterparts. China’s yuan weakened as the central bank widened the currency’s trading band. Higher-yielding currencies trimmed losses against the dollar after U.S. retail sales rose in March and yields on Spanish government securities pared increases.

“There’s still a hesitation with respect to trading in European bond markets,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “The U.S. data was a little bit better than expected. It’s causing a minor risk-on rally.”

The euro fell 0.3 percent to .3040 at 9:59 a.m. in New York after dropping to .2995, the weakest since Feb. 16. The shared currency weakened 0.7 percent to 105.12 yen after declining 0.8 percent on April 13. The euro slipped 0.2 percent to 82.35 U.K. pence after reaching 82.10 pence, the lowest since September 2010. The yen rose 0.4 percent to 80.58 per dollar.

Source | Forex News Paper | http://forexnewspaper.blogspot.com/2012/04/euro-drops-against-major-peers-before.html

XL Capital 2Q profit drops 66 percent

nternational insurer XL Capital Ltd. said Tuesday that its second-quarter profit dropped by two-thirds as the U.S Doller weakened and the company's businesses lost buying power.

Hamilton, Bermuda-based XL Capital reported net income of .9 million, or 23 cents a share, for the three months ended June 30. In the same period in 2008, the company said it earned 7.9 million, or .33 a share.

Revenue fell 18.8 percent to .73 billion from .12 billion a year ago.

Analysts surveyed by Thomson Reuters expected earnings of 7 million, or 62 cents per share, on revenue of .71 billion.

"This was another turbulent quarter for foreign exchange markets," Chief Executive Officer, Michael S. McGavick, said in a statement.

The U.S. Dollar Index lost more than 6 percent during the second quarter, sapping the buying power of companies that do business overseas. XL Capital, the parent company for numerous commercial insurance businesses in 27 countries, said the weaker dollar resulted in an after-tax loss of 2.6 million.

The company also said its profit was hit by a drop in net investment income of 2 million, compared with the second quarter of 2008.

XL Capital reported its earnings after the market closed. Its stock increased 41 cents, or 3 percent, to in aftermarket trading. In the regular session, the stock fell 23 cents to close at .59.

Source | Forex Update | http://adeel-forex-update.blogspot.com/2009/07/xl-capital-2q-profit-drops-66-percent.html

Canadian Dollar Drops for First Time in 4 Days on Risk Aversion

Canada’s dollar depreciated after outperforming all other Group of 10 currencies this week as investors shied away from riskier assets such as commodity- linked currencies.
The loonie, as Canada’s dollar is known, weakened for the first time in four days amid speculation New York-based CIT Group Inc., once the biggest independent commercial lender, may go bankrupt. The currency rose 4.6 percent versus the U.S. dollar from July 10 through yesterday as corporate earnings and commodity price gains whetted investor risk appetite. Raw materials account for more than half of Canada’s export revenue.
“The CIT situation is helping a subtext of risk aversion make itself felt even during what has been a rather positive earnings season,” said Sacha Tihanyi, a currency strategist in Toronto at Scotia Capital Inc., a unit of Canada’s third-largest bank. “This is putting some pressure on” the loonie.
The currency weakened 0.5 percent to C.1181 per U.S. dollar at 4:05 p.m. in Toronto, from C.1126 yesterday, when it reached C.1118, the strongest since June 12. One Canadian dollar buys 89.43 U.S. cents.
Investors should buy the Canadian dollar against the yen because risk appetite is improving and Japan’s currency may suffer from political uncertainty, according to Citigroup Inc.
The New York-based bank entered a long Canadian-dollar position against the yen and expects the cross trade will reach 90 yen per loonie, a team of strategists wrote in a research note today. The Canadian currency traded at 83.90 yen. Going long a currency is betting it will rise. That would be a 7.3 percent gain.
‘On the Mend’
“Risk appetite remains clearly on the mend,” the Citigroup analysts wrote. “Since equities, yields and commodities are all tracking higher in the wake of this improvement in sentiment, we suspect that the Canadian dollar may be among the biggest beneficiaries.”
The loonie outperformed all of the 16 most-traded currencies tracked by Bloomberg so far this month, gaining 4 percent. It was the worst performer in June amid concern an economic recovery would be delayed. Australia’s and New Zealand’s currencies, the loonie’s commodity-linked peers, are down 0.1 percent and up 0.3 percent this month, respectively.
“The prospects for the Canadian economy are improving, but if you look at some of the incoming contemporaneous numbers, they’re still pretty weak,” Steve Englander, chief currency strategist at Barclays Capital Inc., said today in a Bloomberg Television interview. “I don’t think the bank of Canada really feels given the current state of the economy that the Canadian dollar should appreciate anywhere close to parity.”
Consumer Prices
Canadian consumer prices fell 0.3 percent last month from a year ago, according to the median forecast of 22 economists surveyed by Bloomberg. The nation’s statistics agency is due to release the data tomorrow at 7 a.m. in Ottawa. Gross domestic product contracted in April for a ninth month, declining 0.1 percent, Statistics Canada reported June 30.
The Bank of Canada is scheduled to meet July 21 on interest rates. The key rate has been at a record low of 0.25 percent since April. Bank Governor Mark Carney halved the key rate to a record low of 0.25 percent in April. In June he said at least twice the “rapid rise” of the nation’s currency, which gained the most in May since 1950, could threaten the economy.
CIT Group said yesterday the U.S. government wouldn’t rescue the company. Talks with regulators broke off and “there is no appreciable likelihood of additional government support being provided over the near term,” CIT said in a statement.
Bonds Rise
Canada’s dollar will weaken to C.13 by the end of the third quarter and C.14 by year-end, according to the median forecast of 35 economists surveyed by Bloomberg News. Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, predicted the currency will weaken to C.15 by October before bouncing back to C.10 by January.
Government debt rose, with the 10-year Canadian bond’s yield falling eight basis points, or 0.08 percentage point, to 3.41 percent. The price of the 3.75 percent security due in June 2019 gained 71 cents to C2.85. Canada’s government bonds have lost investors 2.5 percent this year, according to a Merrill Lynch & Co. index.
The nation may need to run budget deficits for a decade if Prime Minister Stephen Harper chooses not to raise taxes or cut spending to erase fiscal shortfalls, Dale Orr, an Economic Insight economist, said today.
Harper told reporters July 10 his government would post budget deficits as long as needed to spur growth, pledging not to adhere to a five-year timetable to balance the budget if that required tax increases or reducing spending.
“There has been quite a roller coaster ride in foreign exchange markets over the course of the last several weeks, and today was no different,” Bank of New York Mellon’s Woolfolk said in an interview. “Even though Canada has a fiscal deficit right now because they’re struggling with a recession, by comparison it’s far smaller than any other of the Group of Seven countries.”

Source | Forex News | http://forexnews-4all.blogspot.com/2009/07/canadian-dollar-drops-for-first-time-in.html

Greenback drops to 2-day low versus Brazilian real, Thursday, September 25, 2008 2:44:27 PM

The US dollar dropped against the Brazilian real during New York trading on Thursday. The greenback fell to a 2-day low of 1.8170 versus the real by about 2:30 pm ET from today`s high of 1.8655. The pair that closed yesterday`s deals at 1.8645 is now worth 1.8220.

The Brazilian Census Bureau (IBGE) reported Thursday that unemployment declined to 7.6 percent in August, compared to 8.1 percent in July.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/greenback-drops-to-2-day-low-versus.html

Dollar Drops to Seven-Week Low as Earnings Pare Safety Demand

The dollar declined to a seven-week low versus the euro and the yen dropped as U.S. company results beat analysts’ estimates, reducing demand for safety.
The euro advanced for a second week after reports showed yesterday that the contraction in European manufacturing and services slowed more than forecast and German business confidence rose. The Canadian dollar reached the highest level since June 2 as oil prices gained and the central bank said the nation’s recession is ending.
“There’s slightly more economic optimism,” said Warren Naphtal, who overseas 0 million in assets as chief investment officer at P/E Investments in Waltham, Massachusetts. “What we are seeing is commodity-sensitive currencies, such as the Canadian dollar, are attracting capital. The main backdrop is improvement in outlook in general and the increase of the negative dollar view.”
The dollar declined 0.7 percent to .4202 per euro yesterday from .4102 on July 17. It touched .4291 on July 23, the weakest level since June 3. The yen slid 1.3 percent to 134.63 against the euro from 132.85. Japan’s currency depreciated 0.6 percent to 94.79 versus the dollar from 94.19.
Brazil’s real added 1.6 percent this week to 1.8957 per dollar and touched 1.8824 on July 23, the strongest level since Sept. 29. Brazil’s policy makers signaled a day earlier that they may stop lowering the target lending rate after cutting it by a half-percentage point to a record low of 8.75 percent.
The yen declined against all of its 16 most-traded counterparts tracked by Bloomberg, dropping 5.2 percent to 12.716 versus Sweden’s krona and declining 4.5 percent to 12.251 against the South African rand.
Rising Stocks
The Dow Jones Industrial Average rose above 9,000 for the first time since January on better-than-expected results from companies including Apple Inc. and Intel Corp., encouraging investors to borrow in Japan and buy higher-yielding assets elsewhere. Japan’s 0.1 percent target lending rate is among the lowest in the developed world.
Among Standard & Poor’s 500 Index companies that have posted second-quarter results, 75 percent beat the average analyst forecast, according to data compiled by Bloomberg. That would be the highest rate for a full quarter, Bloomberg data going back to 1993 show. About 300 S&P 500 companies have yet to report for the period.
The Norwegian krone and Canadian dollar were two of the best performers against the dollar among major currencies as crude oil prices rallied 5.4 percent this week to more than a barrel. Oil is the biggest export for both countries.
Krone Versus Dollar
The krone advanced 2.5 percent to 6.2361 per dollar and reached 6.2190 yesterday, the strongest since June 3.
Canada’s currency, known as the loonie, appreciated 2.8 percent this week to C.0826 and touched C.0795 yesterday, the strongest level since early June.
The Bank of Canada said in a report this week that output will expand at a 1.3 percent annualized pace July through September, replacing a forecast of a 1 percent contraction.
The loonie’s 12 percent rally this year is an “important brake” on growth, and the central bank is watching it “very closely,” Bank of Canada Governor Mark Carney told reporters in Ottawa after releasing the economic outlook.
The euro advanced versus the dollar as Markit Economics said yesterday a composite index of the region’s manufacturing and services industries increased in July more than economists forecast to 46.8, representing the slowest pace of contraction in almost a year. A reading below 50 indicates a decline. The Ifo Institute in Munich said its German business climate index rose to 87.3 this month, a nine-month high.
U.S. Economy
The U.S. economy probably contracted at a 1.5 percent annual rate in the second quarter, after shrinking 5.5 percent in the previous three months, according to the median forecast of 66 economists surveyed by Bloomberg News. The report from the Commerce Department is due on July 31.
Citigroup Inc. recommended its clients “take profit” on a bet that the Canadian dollar will gain further against the yen yesterday. The Canadian currency gained 10 percent to 87.85 yen in the past two weeks.
“It’s difficult to sustain the risk rally in light of the lack of pickup in economic data,” said Todd Elmer, a currency strategist at Citigroup in New York, in an interview.
Investors should look to re-enter the Canadian dollar-yen trade at “better levels” on renewed capital outflow from Japanese investors, strategists including Elmer wrote in a note to clients yesterday.
Polish Zloty
Eastern European currencies such as the Polish zloty will advance in the next two weeks as “hot money” flows into the region on signs of global economic recovery, according to David Woo, global head of foreign-exchange strategy at Barclays Capital in London. The zloty gained 3.1 percent this week to 4.1966 per euro in one of the best performances among emerging- market currencies.
“A lot of investors still sit on a lot of cash on the sideline,” said Woo in an interview on Bloomberg Television this week. “What you are seeing is basically people being forced to essentially put money to work.”
Federal Reserve Chairman Ben S. Bernanke told the House Financial Services Committee this week that while the U.S. economy is showing “tentative signs of stabilization,” the central bank intends to maintain a “highly accommodative” monetary policy for an extended period.

Source | Forex News | http://forexnews-4all.blogspot.com/2009/07/dollar-drops-to-seven-week-low-as.html