Forex Research -
Open Market Comments
Rupee made a massive recovery against US currency on the local desk today amid significant decline in dollar’s demand. The American dollar commenced new day’s trading at Rs.82/80, incurred major losses and was changing hands at Rs.82/60 at close of markets on Thursday. Thus, rupee ended the day on a positive versus dollar in the kerb. In the International Market the yen fell as stocks rose after companies including KBC Group NV and Aviva Plc reported earnings that beat analysts’ estimates, sapping demand for the safety of the Japanese currency.
The yen dropped as much as 0.5 percent against the dollar and the euro after a Ministry of Finance report showed the nation’s investors bought 10.2 billion yen ($107 billion) more overseas stocks than they sold last week. The euro fell versus the dollar before an interest-rate decision by the European Central Bank. The Australian dollar traded near the highest against the U.S. dollar in 10 months after a report showed the nation’s employers unexpectedly added jobs in July.
“Higher stocks in Asia and Europe are consistent with a bias towards risk today and a softer yen across the board,” said Jane Foley, research director in London at Forex.com, an online currency trader.
Japan’s currency weakened to 95.42 per dollar as of 11:22 a.m. in London, from 94.97 yesterday in new York, and to 137.22 per euro, from 136.79. The euro dropped to $1.4378, from $1.4404.
Stocks rose around the world after Belgium’s KBC Group reported a surprise profit, U.K. insurer Aviva posted a first- half profit that beat analysts’ estimates, and TDK Corp., the world’s biggest maker of magnetic heads for disk drives, reported a second-quarter net loss that was less than analysts estimated. The MSCI World Index advanced 0.4 percent and the Dow Jones Stoxx 600 Index of European stocks rose 0.8 percent.
The VIX Index, a measure of stock-market volatility known as Wall Street’s fear gauge, fell to as low as 24.86 yesterday, the least since July 28.
Central Bank Meetings
The ECB and Bank of England meet today to grapple with monetary policy amid signs economies are recovering from the first global recession since World War II. German factory orders posted their biggest increase in two years in June, the Economy Ministry in Berlin said today.
The ECB, led by President Jean-Claude Trichet, will keep the main refinancing rate at 1 percent, according to all 52 economists surveyed by Bloomberg. Trichet holds a press conference in Frankfurt following the decision. The Bank of England will keep its main rate at 0.5 percent today, according to all 60 economists in a separate Bloomberg News survey.
The pound traded near a nine-month high against the dollar after the Royal Institution of Chartered Surveyors said Britain’s house prices will increase this year, reversing an earlier prediction for a decline.
The U.K. currency also held near its highest level in more than a month against the euro. The average price of a home will be “slightly higher” in the fourth quarter of 2009 than it was in the same period last year, RICS said. “The housing recovery is definitely helping sterling,” said Adam Cole, the London-based head of global currency strategy at RBC Capital Markets, a unit of Canada’s biggest bank. “Data in the U.K. has been so good this week that sterling is outperforming.” The pound was little changed at $1.6988, after trading at $1.7043 yesterday, the strongest since Oct. 21. It was at 84.63 pence per euro, from 84.81 pence. Eight of 12 primary dealers said the U.K. central bank will end a five-month program of bond purchases after announcing a pause at its policy meeting today. The Australian dollar rose after the nation’s statstics bureau said the number of people employed in Australia rose by 32,200 from June. A decline of 18,000 was expected, according to a Bloomberg News survey. The Aussie traded at 84.08 U.S. cents from 84.06 cents yesterday, and traded as high as 84.61 cents earlier. It climbed to 80.36 yen from 79.82 yen.