Carry Trades Are Supported

(Reuters) - The euro climbed to a more than one-week high against the dollar on Monday after an orderly auction of Greek default insurance supported views that Greece's threat to the euro zone has diminished. The euro also gained against the yen, hitting its strongest level in the almost five months since the Bank of Japan intervened to stem the currency's advance. Investors unwound bearish bets on the euro and focused on a Greek credit default swap auction that set the payout for holders of CDS totaling about 3.2 billion euros. The auction fixed a fair value price of 21.5 cents on the euro for Greek bonds, within expectations. That means an owner of Greek CDS would be paid 78.5 cents on the euro, which analysts said was enough to compensate for the roughly 75 percent loss investors ...

(Reuters) - The dollar slipped against the euro for a third straight day on Monday, receding from last week's one-month high, with the breaching of technical levels fuelling the single currency's strength. The euro also gained against the yen, hitting its highest level in almost five months when the Bank of Japan intervened to stem its currency's climb. "No bad news is arguably good news for the euro," said Nick Bennenbroek, head of currency strategy at Wells Fargo in New York. "This is not headline driven, but rather technical factors causing some short covering." The euro gained against the dollar after clearing recent daily highs of $1.3188 and $1.3192, with stops triggered around the $1.32 level, he said. The euro hit a session high of $1.3264 and last traded at $1.3238, up 0.5 ...

(Reuters) - The euro retreated from a five-month high against the yen and slipped against the dollar in quiet trade on Monday, with a dearth of economic data over the near term seen ultimately favoring the greenback. The yen rose versus growth-linked currencies as selling to fund carry trades abated, following a sharp rise in yen net short positioning over the past three weeks that ultimately took the Japanese currency to an 11-month low against the dollar last week. A dearth of significant data in the coming days means there will be few opportunities for investors to evaluate the U.S. and global economy, so dollar strength could persist, according to Andrew Cox, G10 strategist at CitiFX, a division of Citigroup in New York. "The systemic implications from Greece are zero at this point," ...

(Reuters) - The yen climbed off a five-month low against the euro on Monday and picked up versus growth-linked currencies as selling to fund carry trades abated, but investors will be looking at any rebound as an opportunity to sell the Japanese currency again. "There has been a significant rise in short yen positions so we are seeing a bit of a pullback ahead of a holiday in Japan," said Jeremy Stretch, head of currency strategy at CIBC World Markets. Japanese markets will be shut for a holiday on Tuesday. "These are opportunities to initiate fresh bearish positions and we expect dollar/yen to rise towards 85-85.50 yen while the euro having hit a high above 110 yen, is likely to consolidate." Net shorts in the yen have risen significantly over the past three weeks. With Greek-related ...

Fundamental Analysis EUR "We expect euro-zone gross domestic product to contract further in the first quarter of 2012 and very possibly in the second quarter as well" - Howard Archer, chief European economist at IHS Global Insight European exports rose for a third straight month in January, adding to signs the region is recovering after contraction in the fourth quarter. The 17-nation currency bloc posted a trade deficit of 7.6 billion euros in January, said the European Union's statistics agency Eurostat on Friday. USD "Consumers are pretty stretched at this point" - Scott Brown, chief economist at Raymond James & Associates Inc U.S. industrial production was little changed in February, compared to the previous month, said the Federal Reserve on Wednesday. GBP "Both the systemic risk ...

Fundamental Analysis EUR Greek unemployment rate hit a new record in Q4, approaching 20.7%. The figure indicates that country economy experiences crisis while tight austerity measures are likely to push the county into even deeper recession. The jobless rate is expected to rise further in the following months, said Platon Monokroussos, EFG Eurobank economist. Young individuals were the most severally affected by the slowdown. Almost 40% of people aged between 15 and 24 are without job as compared to 28% in Q4 of 2010. USD February CPI remained in laine with the 0.4% forecast after a 0.2% in January. Manufacuting sales lost 0.9% in January despite a positive 0.4% forecast and a significant 0.6% growth in December. GBP British FTSE 100 index climbed on Friday supported by bank stocks. ...

(Reuters) - The dollar hit a fresh 11-month high against the yen and a one-month peak against the euro in Asia on Thursday, supported by growing optimism about the U.S. economy and subsequent rises in U.S. bond yields. The dollar's strength came as other currencies suffered their own problems, with the euro shackled by worries over debt, the yen hampered by speculation of more Bank of Japan easing and the Aussie dollar hurt by worries about growth in China. "Don't think of this as risk-on bets on the global economy. The market has just reviewed its view on the U.S. economy, scaling back expectations of QE3 by the Fed or the view that the U.S. economy will be doing poorly this year," said Makoto Noji, senior strategist at SMBC Nikko Securities. The U.S. unit gained against all other ...

(Reuters) - Asian shares rose on Monday as surprisingly robust U.S. jobs data bolstered investors' risk appetite, but the euro sagged on worries over a lack of progress in Greek debt restructuring talks which are vital to containing the euro zone crisis. Financial spreadbetters expected Britain's FTSE 100, Germany's DAX and France's CAC-40 to open about 0.2-0.5 percent lower. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 percent after climbing as much as 0.7 percent earlier to its highest in more than five months. The index recorded a fifth successive weekly gain last week. Japan's Nikkei average rose to a three-month high just shy of 9,000 and was last up 1 percent around 8,922. Global economies showed further evidence of resilience last month, with U.S. jobs ...

With the start of the session today, currencies benefited from the optimism which extended from yesterday’s trading to the session today, where yesterday the strong economic data from the United States and Germany in addition to the successful Spanish bond sale spread optimism in the market and supported the sentiment to improve, yet optimism didn’t last as the European Central Bank offered more than expected loans for the euro-area banks. The euro rebounded to the upside after the European Central Bank provided the euro-area banks today with 3-year loans, in attempts to provide liquidity to the market and prevent a credit crunch and an interbank lending freeze from hurting the financial sector, yet markets reversed then to the downside after investors started to weigh the consequences of ...