Dollar rises against euro and yen/Dollar dips/Copper leads rally for commodity markets

Dollar rises against euro and yen
By Miles Johnson and Neil Dennis
Copyright The Financial Times Limited 2009
Published: March 23 2009 11:32 | Last updated: March 23 2009 14:41
http://www.ft.com/cms/s/0/f6fa1cb2-179d-11de-8c9d-0000779fd2ac.html


The dollar rose against the euro and strengthened against the yen on Monday as appetite for the Greenback was whetted by the Obama administration’s latest efforts to stabilise the US banking system.

Treasury secretary Tim Geithner’s announcement that $1,000bn would be used to purge toxic assets from the balance sheets of stricken US banks helped the dollar to claw back losses earlier in the session.

But while global equities rallied on the news, many analysts were left either sceptical or confused due to the lack of detail provided in Mr Geithner’s statement.

“Winston Churchill once quipped that ‘The Americans will always do the right thing after they have exhausted all the alternatives’”, said Mark Chandler, a currency strategist at Brown Brothers Harriman.

“To be sure all the other alternatives have not been exhausted though many were. Although the Treasury’s plan appeared to find immediate support among a couple large private asset managers, many pundits remain sceptical - many still can’t get their heads around how the toxic assets will be priced.”

Shortly after markets opened in New York the dollar was 0.7 per cent higher against the euro to $1.3533, and up 1.4 per cent against the yen to Y97.02.

The yen– its bouts of strength typically seen as closely correlated to heightened investor risk aversion – eased against a basket of competitors as equities listed on Wall Street and Europe’s bourses advanced.

Japanese currency eased 1.7 per cent against the pound to Y141.14, and 0.8 per cent on the euro to Y131.48.

Commodity currencies rose strongly against the dollar and the yen as crude oil and non-precious metals prices rose. The Australian dollar rose 1.2 per cent to $0.6975 and by 2.6 per cent to Y67.77. The New Zealand dollar advanced 1.4 per cent to $0.5673 and by 3 per cent to Y55.11.

Meanwhile, the South African rand jumped 1.7 per cent to R9.4497 against the dollar.

”Commodity currency outperformance runs parallel with rising risk appetite, rebounding Asian currencies and signs that the Chinese economy has bottomed out,” said Hans Redeker of BNP Paribas.

Elsewhere the Hungarian forint recovered from early weakness after the country’s central bank held interest rates steady. The forint had earlier eased against the euro after the Hungarian Prime Minister had offered to step down at the weekend to allow a leader with a fresh mandate to lead the country out of its severe recession.

The forint was flat against the euro at Ft301.87, and down 0.3 per cent against the Swiss franc to Ft197.13.






Dollar dips on Geithner’s ‘loose talk’
By Krishna Guha and Tom Braithwaite in Washington and Peter Garnham in London
Copyright The Financial Times Limited 2009
Published: March 25 2009 14:19 | Last updated: March 25 2009 20:27
http://www.ft.com/cms/s/0/e4c56948-1946-11de-9d34-0000779fd2ac.html


The dollar fell briefly on Wednesday after US Treasury secretary Tim Geithner said he was open to exploring a Chinese proposal to reduce reliance on the US dollar as the world’s reserve currency.

Mr Geithner told the Council for Foreign Relations that he had not studied the proposal by Chinese central bank governor Zhou Xiaochuan for greater use of Special Drawing Rights in international reserves, but said “we are quite open to that”.

He said increased use of SDRs should be thought of as an “evolutionary” step rather than a step towards “global monetary union”. The SDR is a synthetic currency unit maintained by the International Monetary Fund that represents a basket of actual currencies.

The dollar fell 1.3 per cent against the euro as headlines saying “Geithner open to SDR currency” flashed across traders’ screens. With the currency falling, Mr Geithner’s interviewer – Roger Altman, a deputy Treasury secretary in the Clinton administration – gave Mr Geithner the chance to clarify his remarks.

The Treasury secretary said: “I think the dollar remains the world’s dominant reserve currency”. The dollar subsequently recovered much of its losses.

Although Mr Geithner had said the dollar would remain the dominant currency providing the US put its fiscal house in order once the financial crisis was over, analysts were quick to chide him.

“It’s been a tough few weeks for Mr Geithner, but if there is a lesson from today, it is that the dollar is on thin ice and any loose talk will be quickly punished,” said Chris Turner, a strategist at ING Capital Markets.

Experts are uncertain about China’s proposal. “This is obviously not something that is going to happen for quite a long time,” said Morris Goldstein, a fellow at the Petersen Institute. “The crisis does raise a lot of fundamental issues about the architecture of the global financial system, and the reserve currency is one of them.”





Copper leads rally for commodity markets
By Chris Flood
Copyright The Financial Times Limited 2009
Published: March 23 2009 11:53 | Last updated: March 23 2009 11:53
http://www.ft.com/cms/s/0/11d37584-179d-11de-8c9d-0000779fd2ac.html


Copper prices extended their push above the $4,000 a tonne level on Monday, leading base metals higher, while oil prices rose and gold consolidated above the $950 level as commodity markets continued last week’s rally.

Copper hit $4,135 a tonne in morning trade in London on Monday, jumping 4.6 per cent from Friday and gaining 34.7 per cent since the start of the year, helped by fresh evidence of demand improving in China.

Chinese imports of refined copper doubled to 270,948 tonnes in February compared with the same month a year ago, the highest monthly inflow since 2002.

Chinese trade data also showed a huge surge in zinc imports which multiplied more than eightfold to 77,205 tonnes, he highest since November 2005.

Zinc rose 1.9 per cent to $1,920 a tonne, up 6.2 per cent this year.

“With Chinese metal imports so strong, either domestic demand is much stronger than anyone thought or Chinese stockpiles are rising very fast indeed,” said Gayle Berry, analyst at Barclays Capital: “Concern that demand might be stronger than previously thought is keeping metals well bid.”

In energy markets, ICE May Brent rose 43 cents to $51.65 a barrel while Nymex May West Texas Intermediate added 38 cents at $52.45 a barrel.

“The rapid fall of the US dollar is likely to be main reason for the sharp gains in crude oil prices over the past few days,” said analysts at Commerzbank: “As long as the dollar shows persistent weakness, oil prices should still have more upward potential. We anticipate much higher oil prices towards the end of the year.”

Commerzbank said that the latest swing in sentiment in the oil market was reflected in speculative market positioning. The latest data from the Commodity Futures Trading Commission showed a shift to a speculative net-long position of 13,500 lots in the week ending March 17 compared with a net short position of 6,000 lots in the previous week. Commerzbank noted that the shift was solely due to short covering and that long positions (bets on prices rising) remained at their lowest level for three months.

“This creates short-term scope for a fresh oil price rally when long positions are built up again,” said Commerzbank.

Gold traded at $951.60 a troy ounce, moving between a low of $949.85 and a high of $957, after ending trading in New York on Friday at $950.85.