• Home ::
• Technical ::
• Market View ::
• Daily Market Outlook

• Send
• Print
• Add To
• Rss

Daily Market Outlook

Mon, Oct 13 2008, 08:26 GMT
by AceTrader Team

AceTrader

**********************************************************

Market Review -   10/10/2008 21:54 GMT

U.S. dollar rallies to multi-month high as G7 meets in Washington

The U.S. dollar rallied across the board and reached a 15-month high against a basket of major currencies in New York session on Friday as the massive selloff in global stocks together with tight credit markets forced international investors to scramble for the greenback as safe-haven currency, reaffirming its status as the world's reserve currency in times of financial crisis.  
  
In late New York trading, the ICE dollar index, which tracks the value of the greenback against a basket of six currencies, rose 1.23 percent to 82.432, after rising to as high as 83.191, the strongest since June 2007. The index was having its best two weeks since September 1992 and climbed 6.7 percent.  
  
Earlier in the day, risk aversion due to tumbling global stock markets sent the low-yielding yen to a more than six-month high against the dollar and a three-year peak versus the euro. The U.S. dollar fell to as low as 97.91 yen while euro tumbled to 132.15 yen before rebounding. In late New York trade, the dollar ended at up 1 percent at 100.41 yen but the euro last traded down 0.4 percent to 134.57 yen.  
  
The Japanese currency also rose against higher-yielding units such as the Australian and New Zealand dollars, as carry trades were unwound. Over the week, the yen gained 20.2 percent to 65.01 versus the Australian dollar and 13.7 percent to 60.15 against New Zealand's currency.  
  
The dollar got an added boost when a G7 official said on Friday the Group of Seven major nations is unlikely to adopt Britain's proposal to guarantee lending between banks. The euro fell 1.5 percent against the dollar at 1.3399 after touching an 18-1/2-month low of 1.3258. The euro has lost 7.8 percent against the dollar in two weeks, the worst two-week period since its introduction at the start of 1999. Speculation that U.K. would cut interest rates further also pressured sterling for another day and the British pound fell to as low as 1.6781 versus the dollar before recovering to 1.7094.  
  
Investors are looking to the Group of Seven industrial nations finance ministers and central bankers' meeting now in Washington, for remedies to revive the global banking system after recent bailouts, liquidity injections and coordinated   
rate cuts failed to thaw frozen credit markets.   
  
Next Monday, markets in Japan, Canada and U.S will be closed for holiday and economic data releases from other nations include New Zealand retails sales for August, Switzerland combined PPI data for September, and U.K September PPI.

**********************************************************    

Published on  Mon, Oct 13 2008, 08:29 GMT