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Major currencies forex news - 4 November 2014

Read some of the latest news updates on the major currencies and markets

US Dollar, Pound Sterling, Euro, Aussie Dollar, New Zealand Dollar and the South African Rand

Dollar eases but still near highs vs. JPY EUR

The dollar eased against the yen and the euro on Tuesday, but remained close to multi-year highs as investors locked in gains following the greenback’s rally in recent sessions.

USD/JPY was down 0.45% to 113.48, holding below the seven-year peaks of 114.20 struck in the previous session. The yen remained under pressure after the Bank of Japan surprised markets by restarting its bond purchasing stimulus program on Friday, in a bid to shore up the faltering
economic recovery. The BoJ acted after data showed that inflation fell to its lowest in nearly a year in September, as a sales tax hike which came into effect in April continued to hit domestic demand.

The move fuelled expectations that the European Central Bank will have to implement quantitative easing measures in order to stave off the threat of deflation and spur growth in the euro area. Data on Monday highlighted the diverging monetary policy outlook between the Federal Reserve and its major peers. The Institute of Supply Management reported that U.S. manufacturing activity rose more strongly than expected in October.

In contrast, a report showed that manufacturing activity in the euro zone struggled to grow last month, while manufacturing activity in China slumped to a five-month low.
EUR/USD was up 0.26% to 1.2515, not far from the two year trough of 1.2437 set on Monday. The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, slid 0.23% to 87.26, after rising to a four-year peak of 87.54 on Monday.



Sterling at 1 month high against the Euro

Sterling rose to its strongest in a month against the euro on Monday after a survey of UK manufacturing purchasing managers came in stronger than forecast and highlighted the diverging outlooks between the British and euro zone economies.

The manufacturing PMI came in at 53.2 points, compared to a consensus forecast of 51.2, reinforcing Britain’s status as one of the few European economies still growing healthily. Euro zone manufacturing activity expanded at a slightly slower pace than first thought last month as further discounts at the factory gate failed to drive up new orders, a business survey showed on Monday.

“With all that has been going on, sterling is performing extremely well,” said Ian Stannard, head of European currency strategy with US bank Morgan Stanley in London. “This data is going to add to that and euro/sterling is heading back down to the lows we saw a month or so ago.”

The pound traded at 78.105 pence per euro, a quarter of a per cent stronger on the day and within sight of a more-than-two-year peak of 77.665 pence hit on Sept. 30. Against the dollar, sterling reached a day’s high of $1.6027 before retreating to trade down 0.1 per cent on the day at $1.5975.

Sterling has struggled all of last week against the dollar as Bank of England policymakers have emphasised that interest rates would stay at their record low level for longer than previously thought.

Changing expectations on interest rates and political uncertainty have knocked sterling off its perch as the best performing of the world’s major currencies earlier this year.
Scotland’s referendum on independence in September launched a season of political concern which is now likely to last at least until Britain’s parliamentary election next year.

Thereafter there may also be a vote on leaving the European Union to unsettle financial investors, with latest signs at the weekend suggesting Germany for the first time regarded Britain’s departure as a possibility.

“The combined effect of a softer external, especially eurozone picture, and the increased political uncertainties ahead are likely to put some renewed drag on business sentiment,” said Susanne Galler, currency strategist at Jefferies.

She said support for sterling at $1.5850-75 looked vulnerable. Still, even after a pushback last month, the BoE is one of the few developed world central banks likely to raise rates within the next year, underpinning the pound, especially against lower yielding currencies like the yen, euro, Swedish crown and the Swiss franc.

Author: Anirban Nag and Patrick Graham


Australia keeps rates steady as expected, but Aussie dollar gains

The Reserve Bank of Australia voted to keep its benchmark cash rate unchanged Tuesday, also retaining its outlook for a stable policy in the near term. The move -- which keeps the rate at 2.5%, where it has been since August 2013 -- was widely expected. RBA Gov. Glenn Stevens's statement accompanying the decision showed little change from the previous missive on Oct. 7, again saying that "on present indications, the most prudent course is likely to be a period of stability in interest rates."

Despite the lack of any surprises from the latest policy meeting, the Australian dollar AUDUSD, +0.43% firmed slightly after the announcement, rising to 87.15 U.S. cents from 86.98 U.S. cents. As for stocks, the S&P/ASX 200 XJO, +0.24% held to a 0.3% gain.

Author: Michael Kitchen


New Zealand dollar falls against Aussie

The New Zealand dollar fell against its trans-Tasman counterpart after the Reserve Bank of Australia toned down its rhetoric in calling its currency too high, and ahead of the latest Fonterra Cooperative Group dairy auction.

The kiwi fell to 88.70 Australian cents at 5pm in Wellington from 88.99 cents immediately before the announcement, and down from 88.92 cents yesterday. The local currency rose to 77.46 US cents at 5pm from 77.25 cents at 8am, though still lower than 77.61 cents yesterday.

The Australian dollar gained after RBA governor Glenn Stevens said the currency "remains above most estimates of its fundamental value, particularly given the further declines in key commodity prices in recent months", having previously characterised it as "high by historical standards." The RBA kept the key rate at 2.5 percent, and reaffirmed its intention to keep rates low to support economic growth.

"They're still talking about the Aussie currency as still too high, and was very similar to what the RBNZ said, in that their respective commodity prices have fallen," said Michael Johnston, senior trader at HiFX in Auckland.

"The kiwi's range-trading with a downside bias."

The upcoming dairy auction on Fonterra's GlobalDairyTrade platform will be watched for any pick-up in global dairy prices, which the dairy exporter needs to maintain its forecast payout to farmers.

HiFX's Johnston said if that doesn't eventuate, it will weigh on the New Zealand economy, and should push down the kiwi dollar.

New Zealand's commodity prices fell in October for an eighth month, though there were signs of recovery in dairy prices, according to the ANZ commodity price index.

The local currency rose to 87.94 yen at 5pm in Wellington from 87.48 yen yesterday, and fell to 61.82 euro cents from 62.17 cents. It edged down to 48.41 British pence from 48.59 pence. The trade-weighted index declined to 76.31 from 76.48 yesterday.

Author: The New Zealand Herald


Rand steady as dollar slows surge

The rand was steady late on Monday after the dollar slowed its recent run against the world’s major currencies.

At 4.07pm the rand was at R11.0353 to the dollar, little changed from its close of R11.0200 on Friday.

Against the euro the rand was at R13.7860 from its previous close of R13.8214 and was at R17.6391 against the pound from a close of R17.6457.

The local unit earlier fell to R11.08 to the dollar, its weakest level in two weeks, tracking the slump in the euro amid a backdrop of dollar strength.

Earlier on Monday the euro dollar tumbled to $1.2440 - touching levels last seen in August 2012 on increased expectations that US interest rates would soon rise.

Better than expected manufacturing data from SA and the eurozone - the country’s largest trading partner - was largely brushed aside in currency markets as investors kept their gauge on upcoming catalysts which could likely spur further advances in the mighty dollar.

The Kagiso purchasing managers index (PMI) - a gauge of the health of the manufacturing sector in SA rose to 51.8 points in October - its best reading since November 2013. Eurozone PMI to increased to 50.6 points last month from 50.3 in September. A level above 50 indicates expansion.

"It was a big day in terms of global PMI prints but the market has been very lethargic," Rand Merchant Bank currency trader Thando Vokwana said. The absence of Tokyo on Monday due to a public holiday also added to the sluggish trade.

"Euro dollar broke through $1.2500 and this filtered through to the rand," he said, adding that dollar strength was at play across the board with even the Yen hovering at seven-year lows.

Investors are expected to sway on the side of caution as they mark time ahead of the week’s bigger risk events.

In focus will be the interest rate decision from the European Central Bank on Thursday and whether it will unveil new stimulus measures to boost lethargic growth in the region.

The US releases all-important nonfarm payroll figures on Friday.


Major Interbank Exchange Rates


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