- The euro hit a fresh three-year high on Monday against
the dollar as the US currency retreated across the board despite fears
of intervention to weaken the yen by the Bank of Japan.
-
- The euro reached a peak of $1.0474 before lunchtime on
Wall Street as traders faced scant interest and thin liquidity, with many
participants still enjoying Christmas breaks.
-
- The dollar extended its losses as concerns over North
Korea's nuclear programme and the possibility of a war with Iraq continued
to weigh on sentiment towards the currency, prompting a further shift into
perceived safe havens by jittery investors.
-
- There was added pessimism after soft US economic data
indicated a slower-than-expected pace of business activity.
-
- Countries with current account surpluses were net gainers,
and the Swiss franc hit a four-year high while the yen reached a 16-week
high despite fears the Bank of Japan could intervene to stem the yen's
appreciation.
-
- The franc pushed the US currency back to SFr1.3915.
-
- Surpluses imply more hard currency enters a country than
leaves it, providing a cushion against sharp currency depreciation should
outflows suddenly increase or inflows tail off. Countries with deficits,
however, are more at risk of sudden weakness if the inflows needed to sustain
the deficit - well over $1bn a day in the dollar's case - were to fall
off suddenly.
-
- The dollar fell to Y118.45 by midday in New York. "Dollar-yen
[trading] was wary in Asian hours but now the BoJ has gone home, Europe
seems happy to push the dollar lower," said Paul Bednarczyk, currencies
strategist at 4Cast economic consultancy.
-
- Japanese officials have stepped up verbal warnings against
excessive yen strength in recent weeks. The Bank of Japan last intervened
in June to weaken the yen at around the same levels the currency trades
today.
-
- The bank also has a history of using the quiet trading
period around Christmas for intervention.
-
- http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT
|
