FOREX-Dollar off 5-month low, U.S. debt auctions awaited

TOKYO, May 26 (Reuters) - The dollar rose from a five-month low against a basket of currencies on Tuesday as investors booked profits on a spike in the euro and other higher-yielding currencies, while traders awaited U.S. Treasury auctions to test the strength of investor appetite for dollar assets.

The euro slid against the dollar and the yen after Britain's Daily Telegraph reported that Germany's financial regulator BaFin had warned that toxic debt of the country's banks would blow up "like a grenade" unless they took advantage of government's bad bank plans to prepare for next phase of crisis.

The report was not new, however, as the regulator warned last week that German banks have bad assets of around 200 billion euros ($280 billion).

Traders said speculators used the report as an excuse to sell the European single currency after its jump of about 8 percent in just a month against the dollar, from $1.30 to $1.40.

"The euro, the Australian dollar and sterling all have risen to levels where people would feel they have run their course for now," said Osamu Takashima, chief currency analyst at Bank of Tokyo-Mitsubishi UFJ. "It's understandable to see profit-taking on them."

Activity picked up in Asia as U.S. and British financial markets will resume trading later in the day after a three-day weekend.

The dollar index .DXY, a gauge of the greenback's performance against six other major currencies, edged up 0.2 percent to 80.146.

The index struck a five-month trough of 79.805 last week when concern that U.S. government debt may lose its AAA rating prompted investors to sell the world's reserve currency.

The euro fell to $1.3986 , down from $1.4023 in late Asian trade on Monday. It rose as high as $1.4051 on trading platform EBS on Friday, its highest since early January.

The euro was also under pressure a day after the German-based Ifo think tank's business climate index on Monday fell short of market expectations, suggesting that any recovery in the euro zone's biggest economy will take more time.

The European single currency fell to 132.49 yen down almost 1 yen from late Asian trade on Monday, as funds took profits on the euro's sharp gains against the yen in the past week.

Dollar extends slide but Asian stocks gain

HONG KONG (Reuters) - The dollar fell on Friday to its weakest in almost five months against major currencies on investor worries that the United States would lose its AAA rating, though Asian stocks headed for a solid weekly gain.

The dollar's descent was sparked on Thursday when Standard & Poor's cut its outlook on Britain's top rating to negative, bringing into focus other AAA-rated countries that are running into higher debt in an attempt to boost their economies with big spending plans.

Although signs of hope in the global economy are helping to support Asian stocks, worries are also growing about the strength of any recovery and whether the shift into riskier asset such as oil is justified.

A weaker dollar is also strengthening Asian currencies, which is bound to hurt the export-dependent continent and further raise doubts among investors about whether a gain of more than 50 percent in Asian shares excluding Japan since early March is excessive.

"Markets all around the world appear to be looking for direction, and any chance of a U.S. downgrade would really hit U.S. assets such as the dollar and stocks," said Masayoshi Okamoto, head of dealing at Jujiya Securities.

"For Japan, this situation comes just after earnings have come out and companies have set their currency rates, many of them at 95 yen. The chance of any further yen rise really paints a gloomy picture."

The dollar index .DXY, a gauge of its performance against six major currencies, fell as low as 80.257, its weakest since late December and was last down 0.2 percent at 80.302.

The slide in the U.S. currency comes as investors are finding it harder to ignore the effect of the Federal Reserve's zero interest rate policy and its efforts to keep long-term rates low through direct purchases of U.S. government debt.

The dollar slipped 0.3 percent from late U.S. trade to 94.08 yen after falling as low as 93.86 yen on trading platform EBS, its lowest since mid-March.

The euro rose 0.4 percent to $1.3945, its strongest since early January. Sterling, despite the S&P action, rose as high as $1.5893, its highest since early November according to Reuters data, and was last up 0.2 percent at $1.5885.

"S&P gave a clear criteria that a country whose government debt burden is approaching 100 percent of GDP could have its rating downgraded," said Hideki Amikura, deputy general manager of forex trading at Nomura Trust and Banking.

"That prompted investors to think they should not be so optimistic about credit rating on the United States."

But U.S. Treasuries recovered after concerns about debt levels sent prices tumbling on Thursday. The Treasury's announcement that it would sell $101 billion in notes next week also sparked supply concerns.

Benchmark 10-year U.S. Treasury notes rose about one point, sending yields down to 3.34 percent from the 3.37 percent level hit on Thursday that had marked the highest yield on an intraday basis in nearly two weeks.

Market Commentary

MARKET COMMENTARY ON 22ND MAY 2009

GBP/USD closed higher due to short covering on Thursday as it extends yesterday's high range. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are turning bullish signalling that sideways to higher prices are possible near-term. Closes below the 20-day moving average crossing would temper the near-term friendly outlook in the market. If it renews this month's rally, March's high crossing is the next upside target.

EUR/USD closed higher due to short covering on Thursday as it extends yesterday's high range. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are turning bullish signalling that sideways to higher prices are possible near-term. Closes below the 20-day moving average crossing would temper the near-term friendly outlook in the market. If it renews this month's rally, March's high crossing is the next upside target.

USD/CHF closed higher due to short covering on Thursday as the dollar weakened. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are turning bullish signalling that sideways to higher prices are possible near-term. Closes below the 20-day moving average crossing would temper the near-term friendly outlook in the market. If it renews this month's rally, March's high crossing is the next upside target.

USD/JPY closed higher due to short covering on Thursday as the dollar weakened. The high-range close sets the stage for a steady to higher opening on Friday. Stochastics and the RSI are turning bullish signalling that sideways to higher prices are possible near-term. Closes below the 20-day moving average crossing would temper the near-term friendly outlook in the market. If it renews this month's rally, March's high crossing is the next upside target.

Market Commentary

MARKET COMMENTARY ON 19TH MAY 2009

GBP/USD closed higher on Monday and the high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If June extends the rally off April's low, December's high crossing at 1.5545 is the next upside target. Closes below the 20-day moving average crossing at 1.4957 would confirm that a short-term top has been posted.

EU/USD closed higher due to short covering on Monday and above the 10-day moving average crossing at 1.3520. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning bearish signaling that additional profit taking is possible near-term. Closes below the 20-day moving average crossing at 1.3350 would temper the near-term friendly outlook in the market.

USD/CHF closed higher due to short covering on Monday and above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Tuesday. Despite today's rebound, stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing would confirm that a short-term top has been posted. If June renews the rally off April's low, the 75% retracement level of last fall's rally crossing is the next upside target.

USD/CAD closed higher on Monday due to short covering as it consolidated some of last week's decline and closed above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning neutral signaling that sideways trading is possible near-term. If June renews the rally off March's low, the 50% retracement level of the 2008-2009 decline crossing is the next upside target.

USD/JPY posted a key reversal down due to profit taking on Monday as it consolidated some of last week's rally. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning neutral hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 99.80 would confirm that a short-term top has been posted. If June extends this month's rally, March's high crossing at 100.25 is the next upside target.

Market Commentary

MARKET COMMENTARY ON 18TH MAY 2009

GBP/USD closed lower due to profit taking on Friday. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If June extends the rally off April's low, December's high crossing at 1.5545 is the next upside target. Closes below the 20-day moving average crossing at 1.4918 would signal that a short-term top has been posted.

EUR/USD closed sharply lower due to profit taking on Friday and below the 10-day moving average crossing at 1.3495 signaling that a double top with March's high might have been posted this week. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought and are turning neutral to bearish signaling that additional profit taking is possible near-term. Closes below the 20-day moving average crossing at 1.3325 would temper the near-term friendly outlook in the market. If June renews this month's rally, March's high crossing at 1.3700 is the next upside target.

USD/CHF closed sharply lower due to profit taking on Friday and below the 10-day moving average crossing signaling that a short-term top has likely been posted. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI are overbought and are turning bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing would confirm that a short-term top has been posted. If June extends the rally off April's low, the 75% retracement level of last fall's rally crossing is the next upside target.

USD/CAD closed lower on Friday as it extended this week's decline below the 10-day moving average crossing. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing would confirm that a short-term top has been posted.

USD/JPY closed higher on Friday as it extended this week's rally. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are becoming overbought but remain bullish signaling that sideways to higher prices are possible near-term. If June extends this week's rally, March's high crossing at 99.25 is the next upside target. Closes below the 20-day moving average crossing at 93.10 would confirm that a short-term top has been posted.

FOREX-Dollar hits 4-month lows, extends broad slide

TOKYO, May 13 (Reuters) - The dollar hit a four-month low against a basket of currencies and a seven-week trough versus the euro on Wednesday, facing renewed selling amid a recovery in risk appetite that has curbed safe-haven buying of dollars.

Traders said the dollar also came under pressure due to an article in the Financial Times that touched on the risk of the United States losing its triple-A credit rating and refocused attention on rising U.S. debt issuance.

While the content of the FT opinion piece was unsurprising it added to pressure on the dollar, which was already looking vulnerable on technical charts, traders said.

"I think the market overall wanted to test the (dollar's) downside and the FT story linked well with that trend," said a trader for a Japanese trust bank.

The recent recovery in risk appetite and falls in dollar funding costs point to a decline in market players' demand for dollars, leaving the U.S. currency vulnerable, said Takahide Nagasaki, chief foreign exchange strategist for Daiwa Securities SMBC.

"Concerns related to dollar funding have receded somewhat, and the focus turned towards topics that are negative for the United States such as the fiscal deficit," Nagasaki said.

The dollar index, which measures its performance against a basket of six currencies, hit a four-month low of 81.871 .DXY. After trimming some losses, it was down 0.2 percent on the day at 82.140.

Last week, the dollar index breached support at the 200-day moving average while the euro broke above a similar moving average against the dollar.

In addition, the dollar breached key support against the yen earlier this week, when it fell below the top of the cloud on daily Ichimoku charts.

The euro hit a seven-week high of $1.3722 on trading platform EBS, but after shedding some gains it was up 0.2 percent from late U.S. trading on Tuesday at $1.3674 .

FOREX-Yen gains as nerves set in about US stress tests

LONDON, May 6 (Reuters) - The yen gained broadly on Wednesday, while the dollar edged up versus the euro, as nervousness ahead of U.S. stress test results on banks encouraged investors to pare back exposure to risk.

Concerns about these results, which are due on Thursday, were heightened after a source familiar with the tests said Bank of America required as much as $34 billion in additional capital.

This prompted investors to buy back the yen and the dollar -- which typically gain in times of heightened risk aversion -- after recent optimism that the global economy may be over the worst had led them to take on more risk.

The single currency pared some losses after a better-than-expected survey on the euro zone services sector, but wariness about event risks this week kept it in negative territory against both the U.S. and Japanese currencies.

As well as the stress tests, markets were cautious ahead of Thursday's policy decisions by the European Central Bank and the Bank of England and key U.S. jobs data on Friday.

Later on Wednesday, investors will be watching out for U.S. ADP unemployment data, which could provide some clues on how bad the state of the U.S. jobs market is.

"There is still some bullish news around and there have been some bright sparks recently, but people are wary that there could be things waiting around the corner to trip things up," CMC Markets analyst James Hughes said.

"The stress test results will be key as there is still a lot of underlying nervousness surrounding the banking sector," he added.

Market Commentary

MARKET COMMENTARY ON 05TH MAY 2009

GBP/USD closed higher on Monday and above the 20-day moving average crossing confirming that a short-term high has been posted. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are bullish signalling that sideways to higher prices are possible near-term. If it extends last week's rally, the reaction high crossing is the next upside target. Closes below the 10-day moving average crossing would confirm that a short-term bottom has been posted.

EUR/USD closed higher on Monday and above the 20-day moving average crossing confirming that a short-term high has been posted. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are bullish signalling that sideways to higher prices are possible near-term. If it extends last week's rally, the reaction high crossing is the next upside target. Closes below the 10-day moving average crossing would confirm that a short-term bottom has been posted.


USD/CHF closed higher on Monday and above the 20-day moving average crossing confirming that a short-term high has been posted. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are bullish signalling that sideways to higher prices are possible near-term. If it extends last week's rally, the reaction high crossing is the next upside target. Closes below the 10-day moving average crossing would confirm that a short-term bottom has been posted.


USD/JPY closed higher on Monday and above the 20-day moving average crossing confirming that a short-term high has been posted. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are bullish signalling that sideways to higher prices are possible near-term. If it extends last week's rally, the reaction high crossing is the next upside target. Closes below the 10-day moving average crossing would confirm that a short-term bottom has been posted.