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Dollar, Euro, Pound & Yen

23:57 Tuesday 22 June, 2010

British shares were lower Tuesday after the U.K. government set out its emergency budget, but an advance from lenders Royal Bank of Scotland and Lloyds Banking Group and retailers helped the index off session lows.

"The emergency budget today was a little less draconian than had been feared," said Douglas McWilliams, economist at the Centre for Economics and Business Research.

22:24 Tuesday 22 June, 2010

Asian shares ended mostly lower Tuesday on doubts over the pace at which the Chinese yuan can appreciate and after Monday's weak close on Wall Street.

Resource-linked shares and exporters were broadly lower.

Concerns over Europe also resurfaced after Fitch Ratings on Monday downgraded French banking giant BNP Paribas to AA- from AA.

"Investors have welcomed a move from the People's Bank of China to allow the yuan to appreciate against the U.S. dollar," said David Taylor, market analyst at CMC Markets in Sydney. However, "given that a lot of China's news was factored into our market [on Monday], and BNP Paribas managed to spook Wall Street overnight, we could see some risk aversion returning to our market," he said.

22:20 Tuesday 22 June, 2010

Oil futures dropped below $78 a barrel on Tuesday, as the downgrade of a major French bank and a warning about mounting losses at Spanish lenders triggered drops in European equities, souring sentiment among energy traders.

Crude oil for August delivery fell 92 cents, or 1.2%, to $77.69 a barrel in electronic trading on Globex.

The contract earlier hit an intraday low of $77.27 a barrel.

"Today, prices are trading lower, now that the initial euphoria about possible appreciation of the yuan has vanished and the weaker euro again has put pressure on oil prices," wrote analysts at Commerzbank AG in a note to clients.

22:16 Tuesday 22 June, 2010

U.S. stock futures declined Tuesday, with worries over the health of the European banks at the forefront as the Federal Reserve begins its two-day interest rate setting meeting.

S&P 500 futures fell 2.4 points to 1,108.20 and Nasdaq 100 futures slipped 1.75 points to 1,898.00. Futures on the Dow Jones Industrial Average fell 11 points.

U.S. stocks couldn't hold early gains Monday, as early optimism over China's decision to let the yuan move against the dollar was checked by worries over Europe's health when French bank BNP Paribas' credit rating was downgraded. After rising as much as 140 points, the Dow Jones Industrial Average finished with a decline of 8 points.

Tuesday's session includes data on May existing home sales as the Federal Open Market Committee begin its two-day meeting. As is custom, no comment is expected on the first day.

14:52 Tuesday 22 June, 2010

Asian shares were mostly lower Tuesday as investors took a breather after sharp gains the prior session, with demand ebbing after Wall Street pulled back on Monday.

Asian currencies and the euro rose briefly against the U.S. dollar after Beijing lowered the dollar/yuan reference rate, but the gains evaporated as the yuan fell on apparent dollar-buying from Chinese banks.

The positive impact on markets from China's weekend decision to allow greater flexibility in the yuan's exchange rate had worn off as it was clear that Beijing would not allow the currency to move quickly.

"Investors have welcomed a move from the People's Bank of China to allow the yuan to appreciate against the U.S. dollar," said David Taylor, market analyst at CMC Markets in Sydney.

However, "given that a lot of China's news was factored into our market (on Monday), and BNP Paribas managed to spook Wall Street overnight, we could see some risk aversion returning to our market," he said. Wall Street weakened Monday after Fitch Ratings' downgrade of French banking giant BNP Paribas to AA- from AA reminded investors of Europe's ongoing travails.

14:28 Tuesday 22 June, 2010

The U.S. dollar gained on the euro and Australian dollar in early Asian trading Tuesday, taking back some of the ground lost in the previous session following China's weekend announcement that it will ease its de-facto currency peg to the greenback.

"The realization that China will only move very gradually on the CNY [Chinese yuan] brought a dose of reality back to markets after the initial euphoria," said Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole, in a note to clients.

08:26 Tuesday 22 June, 2010

U.S. stocks turned lower Monday as investors considered the pace at which China would revalue its currency and a downgrade of French banking giant BNP Paribas reignited worries about Europe's debt troubles.

"It's too early to tell if this is a fundamental regime change. There is a lot of speculation about whether they are going to follow through on this," said Adrian Cronje, chief investment officer at Balentine, speaking of the Chinese currency move.

"Another reality of China's announcement, in addition to the growing pressure to raise wages in China, is the cost of imported goods, particularly those sold by U.S. retailers to U.S. consumers can only go up from here," said Peter Boockvar, equity strategist at Miller Tabak.

08:18 Tuesday 22 June, 2010

The failure of Standard & Poor’s 500 Index to hold above levels monitored by analysts is sending a bearish signal to traders who base day-to-day decisions on whether to buy or sell stocks on price charts.

The benchmark index for U.S. stocks rose to 1,131.23 today before reversing course and falling to 1,113.20 at 4 p.m. in New York. The rally fizzled above 1,120.84, the level marking a 50 percent recovery of its October 2007 to March 2009 plunge, and 1,130.29, the midpoint of its intraday highs and lows in 2010.

Equities have been influenced by price patterns this month in the absence of other catalysts as traders await the start of the second-quarter earnings season in July. The S&P 500 climbed 2.4 percent on June 15 as investors focused on a level calculated from the index’s value over the last 200 days and is little changed in the four sessions since.

Failing to hold the level “could be a sign today’s reversal could have more downside pressure,” said Ryan Detrick, chief technical strategist at Schaeffer’s Investment Research in Cincinnati. “We don’t expect a major plunge, nor a break of the recent lows on the S&P 500 near 1,040. But after the strength of the past two weeks, some short-term weakness could happen.”

08:15 Tuesday 22 June, 2010

Asian currencies from the won to the ringgit are luring two of the region’s largest investors on speculation China’s decision to end the yuan’s peg will increase demand in the world’s third-biggest economy.

Mitsubishi UFJ Asset Management Co., a unit of Japan’s largest bank by market value, says Asian central banks will allow their currencies to rise more by reducing dollar purchases. AMP Capital Investors Ltd., Australia’s second- biggest money manager, predicts the region’s currencies will gain as much 15 percent in the next year as China’s move underscores the strength of the global recovery.

The yuan rose the most in five years yesterday after the central bank said June 19 it would increase the currency’s “flexibility,” scrapping a two-year peg against the dollar aimed at shielding exporters from the global financial crisis. The Bloomberg-JPMorgan Asia Dollar Index climbed 0.8 percent, the most in six weeks. Policy makers from the Philippines to Thailand said the change would spur regional trade.

“Asian central banks will probably ease their grip on intervention as competitiveness becomes less of an issue,” said Hideo Shimomura, who helps oversee the equivalent of $55.4 billion at Tokyo-based Mitsubishi UFJ Asset. “Authorities in Asia see the move as confidence by the Chinese authorities in its economic state.” Shimomura said he may add to holdings of Asian currencies including the Singapore dollar.

08:11 Tuesday 22 June, 2010

U.S. stocks fell, slowing a global rally, as the Standard & Poor’s 500 Index failed to remain above levels watched by traders and optimism about China’s plan to relax the yuan’s fixed rate to the dollar faded in the last hour. Commodities pared gains and Treasuries trimmed losses.

The S&P 500 slipped 0.4 percent to 1,113.2 at 4 p.m. in New York after jumping as much as 1.2 percent in the first hour. The Reuters/Jefferies Index of commodities trimmed a 1.6 percent rally to less than 0.3 percent. Ten-year Treasury yields rose 3 basis points to 3.25 percent after surging 8 basis points. The losses in U.S. stocks weren’t enough to erase gains in the MSCI World Index, with the developed-markets gauge rising 0.5 percent for a 10th straight advance, the longest streak in 11 months.

Retailers had the steepest decline among 24 groups in the S&P 500, losing 1.7 percent collectively, amid concern a stronger Chinese currency will boost the cost of importing goods from the country. U.S. equities extended losses as the S&P 500 failed to stay above a level marking a recovery of 50 percent of its bear-market plunge from a 2007 record and remained below its average levels over the past 50 and 100 days.

“The announcement out of China elicited an emotional response from the market,” said Alan Gayle, senior investment strategist at RidgeWorth Investments in Richmond, Virginia, which oversees $63 billion. “A closer look at the announcement suggests China’s approach is very gradual and it is continuing at its own pace. It’s a less dramatic move when looked at more closely.”

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