The Dollar gained broadly on Tuesday as news that Citigroup would sell a $7.5 bio stake to the Abu Dhabi government triggered a wave of buying from traders who rely on computer models. The overnight Citigroup news restored confidence in battered US banks, fueling a steep rally in the stock market. The Dollar rose sharply against the Yen in the Tokyo session after the Citi report, sparking the unwinding of short positions on the greenback, and that rally spilled over to other currencies, traders said. Investors interpreted Citi's move as a sign that financial institutions were repairing the damage from a meltdown in the US sub-prime mortgage market and the resulting credit crunch, which has been a big factor behind recent dollar weakness. The Dollar pulled away from a 2-1/2-year low against the Yen touched on Monday to trade at 108.82, up 1.37% and on track for its biggest one-day gain since late August. The Yen fell broadly as news of the Citi stake sale prompted a recovery in the Nikkei share index, fueling demand for relatively riskier assets. UsdChf rose 0.78% to 1.1053. GbpUsd was fairly unchanged -0.08% at 2.0674. EurUsd fell 0.28% to 1.4809, more than a cent below last week's record highs at 1.4967. The single currency was little affected by remarks on Tuesday by German Finance Minister Peer Steinbrueck, who said he expected the economic upturn in the euro zone's largest economy to continue in 2008 despite the strong Euro. UsdJpy gained despite a report showed US consumer confidence fell for the fourth straight month in November to its lowest in two years on concerns about rising gasoline prices. Comments by Federal Reserve Bank of Philadelphia President Charles Plosser (not a voter on Fed monetary policy) had little impact on the currency market. He said US interest rate cuts increase the risk of higher inflation. On Wednesday, investors are expected to focus on the Fed's Beige Book report for clues on what the US central bank intends to do at its monetary policy meeting on December 11th.
Monday 3 December 2007
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment