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Daily Market Outlook

Mon, Sep 29 2008, 00:25 GMT
by AceTrader Team

AceTrader

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Market Review -    26/09/2008 22:32 GMT

The greenback falls versus yen amid bailout plan uncertainty

The U.S. dollar fell against the Japanese yen on Friday, as anxiety over the government's proposed $700 billion bailout plan and the seizure of Washington Mutual Inc prompted investors to shun risky trades. Traders sold high-yielding currencies such as the Australian dollar in Asian session and bought the low-yielding, safe-haven yen as Republican and Democratic lawmakers clashed over the financial rescue plan in Washington. Meanwhile, U.S. President George W. Bush acknowledged that there were disagreements, but expressed optimism that Congress and the White House would come together on the proposal to rescue the troubled U.S. financial system.  
  
The market still has a sense of optimism that some sort of deal would be done over the weekend and helped the U.S. stock markets to rebound, major stocks closed mostly higher on Friday and provided some support for the greenback. The Dow Jones industrial average index ended up 121 points, or 1.10 percent at 11,143.  
  
Against the yen, the dollar was down 0.3 and traded at 106.09 yen in late New York, having dropped to as low as 105.03 yen earlier in the day. The Australian dollar and euro fell to session lows of 86.87 yen and 153.48 yen before recovering, ended down 1 percent at 88.15 and 0.5 percent at 154.91 respectively by New York closing. The euro was came under some pressure after European sources said market expectations about European Central Bank rate cuts early next year or even sooner are reasonable. The euro declined to as low as 1.4555 against the dollar and ended the week down down 0.1 percent at 1.4614.  
  
Earlier in NY session, the Commerce Department said the U.S. economy expanded at an annual rate of 2.8 percent in the second quarter, slower than the previous estimate. Other reports showed on Thursday that sales of new homes fell to a 17-year low in August and orders for durable goods dropped more than forecast.  
  
The dollar index on the ICE Futures Exchange, a measure of the greenback's value against six major currencies, recovered from it session low of 76.695 and ended little changed at 76.956. Overall, currency trading was lacking liquidity and direction with traders staying on the sidelines awaiting the outcome of the bailout package next week.   
  
Economic data releases on Monday include New Zealand trade data, Japan retail sales, eurozone business climate, economic sentiment, and U.S. PCE data, personal spending, personal income and Midwest manufacturing. Traders will wait for more clues on dollar’s direction as U.S. non-farm payrolls report and unemployment rate will be released on Friday.
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Published on  Mon, Sep 29 2008, 01:15 GMT