European currency falls to 1-week low against Japanese yen, Friday, September 26, 2008 6:09:45 AM

Extending Asian session downtrend, the European currency declined to 1-week low against the Japanese yen and a 3-day low versus the Swiss franc during early European deals on Friday. The euro also remained down against the currencies of US and UK.

In economic news, Germany`s import price inflation remained stable in August at its highest level in nearly eight years on higher energy prices.

The Federal Statistical Office said today that the import price index rose 9.3% year-on-year in August, marking the same pace as in July, while quicker than the 8.9% increase in June. Meanwhile, economists had forecast the rate to ease to 9.1%. The August rate was the highest since November 2000. In the same period last year, prices were down 0.6%.

The French economy contracted 0.3% quarter-on-quarter in the second quarter, confirmed the initial estimate, a final report from the statistical office INSEE revealed today. The economy had expanded 0.4% in the first quarter.

The Federal Reserve, the Bank of England, the European Central Bank, or ECB and the Swiss National Bank or SNB revealed today that they are introducing operations to provide U.S. dollar liquidity with a one-week maturity using their reciprocal currency arrangements or swap lines.

The Federal Open Market Committee authorized a billion increase in its temporary swap facility with the ECB and a billion increase in its facility with the SNB. According to the Fed, these expanded facilities will now support the provision of U.S. dollar liquidity in amounts of up to 0 billion by the ECB and up to billion by the SNB.

Against the US dollar, the European currency showed weakness during early deals on Friday. At 3:55 am ET, the euro-dollar pair touched a low of 1.4568, compared to 1.4610 hit late New York Thursday. The pair is now worth 1.4578.

The European currency that closed Thursday`s North American session at 0.7954 against the British pound edged down to 0.7940 at 5:05 am ET Friday.

The Bank of England said today that it will increase the term of its existing operations to lend US dollar funds against collateral eligible in short-term repos and US Treasuries.

Alongside an operation to lend funds overnight, the central bank will lend US billion of funds for one week today. The Bank of England`s overnight dollar repo operations will be US billion on Friday.

Against the Swiss franc, the single currency edged lower during Friday`s early deals. At 3:30 am ET the euro-franc pair slipped to a 3-day low of 1.5880, compared to 1.5937 hit late New York Thursday. The pair is currently quoted at 1.5891.

The Swiss leading indicator in September declined further to 0.62 points from a revised 0.73 points in August, the KOF Economic Institute said today. August`s reading was upwardly revised from 0.68. Economists were looking for a reading of 0.54 for September.

The euro that closed Thursday`s New York deals at 155.70 against the Japanese yen declined to a 1-week low of 153.50 at 3:55 am ET Friday. The euro-yen pair is currently trading at 153.86.

Core inflation in Japan rose 2.4 percent on year in August, in line with analyst expectations, the Ministry of Internal Affairs and Communications said today. It also held steady from the July figure, equaling an 11-year high. Overall nationwide CPI was up an annual 2.1 percent, matching forecasts after a 2.3 percent gain on year in the previous month. Overall inflation gained o.3 percent on month.

Across the Atlantic, the US final second quarter GDP, personal consumption expenditure and the University of Michigan`s confidence survey are scheduled for release later in the New York session.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/european-currency-falls-to-1-week-low.html

Russian ruble slips to 2-day low against US dollar, Friday, September 26, 2008 6:37:48 AM

Against the US dollar, the Russian ruble edged down to a 2-day low of 25.0850 at about 6:25 am ET Friday. If the Russian currency weakens further, it may likely target the 25.3 level. The dollar-ruble pair closed Thursday`s North American session at 25.0275.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/russian-ruble-slips-to-2-day-low.html

Hong Kong Dollar Recovers Asian session Losses against US Dollar, Friday, September 26, 2008 7:37:49 AM

The Hong Kong dollar recovered Friday`s Asian session losses against the US dollar during early European deals. The local dollar thus climbed from a 1-week low of 7.7840 to 7.7697 against the greenback by about 4:00 am ET. The pair that closed Thursday`s deals at 7.7785 is now worth 7.7743.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/hong-kong-dollar-recovers-asian-session.html

Global Central Banks Brace For Liquidity Crunch, Friday, September 26, 2008 11:10:04 AM

Friday, the Federal Reserve and leading European central banks announced coordinated measures to address funding pressures. Central banks in Asia Pacific also took measures to boost liquidity.

The Fed along with the European Central Bank, the Bank of England and the Swiss National Bank provided U.S. dollar liquidity with a one-weak maturity. Reiterating that they will continue to work together, the central banks said they are ready to take additional measures as needed to deal with the ongoing pressures in the funding markets.

The latest liquidity boost from global central banks came following a breakdown of talks over a US0 billion rescue plan for the US financial system. Sentiment in financial markets also took a hit on the news of collapse of U.S. bank Washington Mutual. Late Thursday, JPMorgan Chase & Co. said that it has agreed to acquire all deposits and assets of Washington Mutual for about .9 billion, after the struggling company was seized by regulators in what is considered as the largest bank failure in U.S. history.

In a statement, the Fed said the Federal Open Market Committee authorized a billion increase in its temporary swap facility with the ECB and a billion increase in its facility with the SNB. These expanded facilities will support the provision of U.S. dollar liquidity in amounts of up to 0 billion by the ECB and up to billion by the SNB.

Together, these changes represent a billion addition to the 7 billion previously authorized swap deals with other central banks. Previously, the Fed had authorized swap lines with the Bank of Japan ( billion), the Bank of England ( billion), the Reserve Bank of Australia ( billion), the Bank of Canada ( billion), the Bank of Sweden ( billion), the National Bank of Denmark ( billion), and the Bank of Norway ( billion). The Fed said these arrangements have been authorized through January 30, 2009.

The actions were in response to the crisis at U.S. financial firms, which took excessive bets on mortgage-backed investments resulting in the write off of billions of dollars of assets. The troubled U. S. investment bank Lehman Brothers went bankrupt, while Merrill Lynch got sold to the Bank of America in a quickly-negotiated -billion transaction. Meanwhile, the U.S. government stepped in to save insurer AIG from sinking. The Fed extended an billion loan, essentially nationalizing the firm. Further, investment banks Goldman Sachs and Morgan Stanley converted themselves into regulated commercial banks.

In the latest move, the ECB decided to provide US dollar one-week funding over the quarter end to European banks, applying a variable rate tender procedure and with an intended volume of US billion. The bank received bids worth US.495 billion from 52 banks. The bank offered the funds at a marginal rate of 4.5%. In its overnight operations, the ECB lent US billion, reduced from an initial US billion, against a bid amount of US.38 billion from 33 bidders at a marginal rate of 2.25%.

The SNB allotted US.9 billion at a marginal interest rate of 1% in its one-week repo operation, which had twelve banks participating. In its overnight operation, the central bank allotted US billion against a bid amount of US.3 billion from 13 banks at a marginal rate of 1.82%.

The Bank of England said in a statement that it will increase the term of its existing operations to lend US dollar funds against collateral eligible in short-term repos and US Treasuries. Alongside an operation to lend funds overnight, the central bank will lend US billion of funds for one week today.

The UK central bank`s overnight dollar repo operation was US billion on Friday, reduced from US billion earlier, against a bid amount of US.36 billion. The cover ratio was 1.24 and weighted average accepted rate of 2.208%. In the one-week operation, the bank received US.65 billion worth bids and the cover ratio was 1.06%. The weighted average accepted rate was 2.991%.

The BoE added that Bank`s long-term repo operations against extended collateral, including mortgage securities, will for a period be held weekly and enlarged. The first such operation will be held on September 29. It will be an auction for GBP40 billion, for maturity to January 15, 2009.

Meanwhile, the Danish central bank extended the banks and mortgage credit institutes lending facilities given the tight liquidity conditions. The Danmarks Nationalbank said it will introduce a facility offering banks and institutes credit on the basis of their excess capital adequacy and will increases the number of assets accepted as collateral. These measures will come into effect on September 26. The central bank received bids worth US.8 billion against an offered amount of US billion in its US dollar auction.

Markets in Asia Pacific also received funds on Friday. Data from the Reserve Bank of Australia offered A6 million today in repo. Further, the Australian central bank reportedly said it offered US billion in its first US dollar repurchase operation. Further, the Australian government announced that it will invest A billion in two tranches in the domestic residential mortgage-backed securities to boost home lending.

Elsewhere in the region, the Bank of Japan injected 1.5 trillion yen or USbillion into its money markets.

The South Korean Finance Ministry announced that it would supply at least US billion into the swap market in the coming weeks in order to provide more liquidity. Choi Jong-ku, head of the ministry`s international financial bureau said the central bank would continue to supply dollars whenever necessary.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/global-central-banks-brace-for.html

Japanese yen pares gains against most majors, Friday, September 26, 2008 12:12:14 PM

The Japanese currency pared early gains against most of its major counterparts during New York mid-day trading on Friday.

The Ministry of Internal Affairs and Communications said that core inflation in Japan increased 2.4 percent on year in August, in line with analyst expectations. It also held steady from the July figure, equaling an 11-year high.

Overall nationwide CPI was up an annual 2.1 percent, matching forecasts after a 2.3 percent gain on year in the previous month. Overall inflation gained 0.3 percent on month.

After hitting an 8-day high of 105.05 by about 8:35 am ET, the yen reversed its direction against the US dollar in New York mid-day deals today. Currently, the pair is worth 106.08.

The U.S. Commerce Department revealed that Gross Domestic Product grew at a rate of 2.8 percent in the April-to-June period. This was slower than the 3.3 percent pace that was reported last month.

The Japanese currency trended down against the euro and the British pound in New York morning deals from previous session`s uptrend. As of now, the yen is trading at 154.77 against the euro and 195.14 versus the pound, compared to early 1-week highs of 153.50 and 193.22, respectively.

Against the Swiss franc, the yen weakened to 97.76 by about 10:00 am ET from last session`s 4-day high of 96.63 today. Presently, the franc-yen pair is trading near 97.40.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/japanese-yen-pares-gains-against-most.html

Aussie recoups losses against most majors, Friday, September 26, 2008 12:37:35 PM

The Australian dollar strengthened against most of its major counterparts from previous session`s downtrend in New York morning deals on Friday.

After touching a 1-week low of 0.8243 against the US dollar and 0.8545 versus the Canadian dollar at about 3:55 am ET, the Aussie gained ground in New York morning session on Friday. As of now, the Australian currency is trading at 0.8317 against the greenback and 0.8608 versus the loonie.

The U.S. Commerce Department revealed that Gross Domestic Product grew at a rate of 2.8 percent in the April-to-June period. This was slower than the 3.3 percent pace that was reported last month.

The statistics also showed that personal spending advanced at a 1.2 percent rate during the quarter, revised down from the 1.7 percent that was previously estimated.

The Aussie ticked up to 1.7539 against the euro and 88.45 versus the yen by about 10:00 am ET from last session`s weekly lows of 1.7686 and 86.89, respectively. At present, the Aussie is worth 1.7577 against the euro and 88.26 versus the yen.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/aussie-recoups-losses-against-most.html

Canadian Dollar Shows Mild Strength Versus Majors, Friday, September 26, 2008 12:53:59 PM

The loonie showed mild strength against its major counterparts on Friday in New York, most notably reaching a fresh weekly high against the euro.

Crude oil dropped on Friday as the ongoing problems in the U.S. financial sector could continue to cause traders to feel energy demand could be dragged lower. Light sweet crude for November delivery moved to 5.67, down .35 on the session. Prices hit as low as 4.25 in overnight deals.

The Canadian dollar experienced choppy trading with the U.S. dollar on Friday. The pair bounced between 1.0372 and 1.0314 throughout the day, staying just below Thursday`s multi-month high.

Investors weighed a slew of reports showing U.S. gross domestic product and personal consumption fell unexpectedly in the second quarter, while a University of Michigan survey showed consumer confidence dropped more than expected in September.

The loonie climbed to a fresh weekly high versus the euro on Friday. The Canadian dollar advanced to 1.5071 just after 6:00 am ET, up from an early morning low of 1.5164. Traders pondered a report showing French gross domestic product contracted at an expected rate in the second quarter.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/canadian-dollar-shows-mild-strength.html

Swiss Franc Lacks Direction With Majors, Friday, September 26, 2008 1:10:25 PM

The Swiss franc posted lackluster performances against its major counterparts on Friday in New York. Traders weighed a report showing the Swiss leading indicator fell less than expected in September.

Indicting continued easing in Swiss economic growth, the KOF leading indicator in September declined further to 0.62 points from a revised 0.73 points in August, the KOF Economic Institute said. The August reading was upwardly revised from 0.68. Economists were looking for a reading of 0.54 for September.

According to the institute, Switzerland`s annual gross domestic product growth will slow in the months ahead. Among the three modules of the KOF indicator, the Core GDP module continued its downward trend. Meanwhile, the construction and banking modules showed a stabilizing effect.

The Swiss franc lacked direction with the dollar on Friday. The pair bounced between 1.0911 and 1.0828 throughout the day, staying below Monday`s multi-week high.

Investors pondered a slew of reports showing U.S. gross domestic product and personal consumption fell unexpectedly in the second quarter, while a University of Michigan survey showed consumer confidence dropped more than expected in September.

Versus the euro, the franc pulled back from a weekly high on Friday. After advancing to 1.5860 by 7:30 am ET, the euro fell back to 1.5909 in the afternoon. Traders digested a report showing French gross domestic product contracted at an expected rate in the second quarter.

Against the pound on Friday, the franc moved with uncertainty. The two currencies moved between 1.9941 and 2.0024, staying above last week`s monthly low.

The Bank of England said it will increase the term of its existing operations to lend US dollar funds against collateral eligible in short-term repos and US Treasuries. Alongside an operation to lend funds overnight, the central bank will lend US billion of funds for one week today. The Bank of England`s overnight dollar repo operations will be US billion on Friday.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/swiss-franc-lacks-direction-with-majors.html

US dollar advances further to 4-day high versus Israeli shekel, Friday, September 26, 2008 1:33:16 PM

Extending early European session`s uptrend, the US currency advanced to a 4-day high of 3.4438 against its Israeli counterpart at about 6:15 am ET. Thereafter, the pair ticked down slightly and as of now is worth 3.4242. The dollar-shekel pair closed yesterday`s deals at 3.4100.

Source | Forex News | http://forexfx-news.blogspot.com/2008/09/us-dollar-advances-further-to-4-day.html