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FOREX-Dollar falls vs high-yielders; market eyes Bernanke
August 22, 2011 / 8:20 PM / in 6 years

FOREX-Dollar falls vs high-yielders; market eyes Bernanke

  
 * Dollar struggles vs high-yielders as Fed meeting nears
 * SNB intervenes in Swiss franc forward market
 * Merkel repeats opposition to euro zone bond idea
 (Updates prices)
 By Wanfeng Zhou
 NEW YORK, Aug 22 (Reuters) - The dollar fell against some
commodity-linked currencies on Monday as investors speculated
the Federal Reserve could take new measures to boost the U.S.
economy, lifting appetite for riskier assets.
 The euro wobbled against the dollar for fear the European
Union was moving too slowly to address its debt and banking
crisis, while Swiss authorities tried to drive down the franc.
 The Fed will host its annual retreat in Wyoming this week,
and recent market turmoil and signs of weaker U.S. growth have
boosted expectations Fed Chairman Ben Bernanke may hint at more
emergency stimulus for the economy.
 At last year's meeting Bernanke hinted at what eventually
became a $600 billion 'quantitative easing' bond-buying
program, known as QE2.
 "The Fed is definitely on people's minds, and you could
argue that some of the bounce seen in high-yield commodity
currencies is at least in part related to hopes for more policy
measures," said Wells Fargo strategist Vassili Serebriakov in
New York.
 The Australian dollar AUD=D4 was last up 0.2 percent at
$1.0414. The New Zealand dollar NZD=D4 rose 1 percent to
$0.8241 while the greenback slipped 0.1 percent to 0.9894
Canadian dollar CAD=D4.
 Fed easing increases the amount of dollars in the system,
pushing down the currency's value and U.S. interest rates. That
encourages investors to seek higher returns in stocks or other
currencies. But some analysts said Bernanke may hold off on
aggressive easing plans. For more see [ID:nN1E77I0NF].
 Karl Schamotta, senior market strategist at Western Union
Business Solutions in Calgary, said that with the financial
system already awash with cheap money, providing additional
liquidity is extremely risky. In addition, the markets are
already doing the central bank's work by pushing Treasury
yields to shockingly low levels.
 "Investors looking for a third round of large-scale asset
purchases are likely to be disappointed," he said. "Those
looking for another injection of cheap liquidity may express
their disappointment by pushing short yields and the dollar
upward."
 The latest positioning data shows speculators increased
their bets against the dollar last week. [IMM/FX]
 The euro EUR= traded down 0.2 percent at $1.4361. Concern
about the European debt crisis rose after German Chancellor
Angela Merkel on Sunday rebuffed calls for joint
euro-denominated bonds as a way for fiscally weak euro zone
countries to borrow. [ID:nL5E7JJ3MN]
 SWISSIE, YEN IN SPOTLIGHT
 The euro and dollar edged up against the Swiss franc
CHF=EBS EURCHF=EBS. Traders said the Swiss National Bank
intervened in the one-month forward market to deter investors
from buying the currency CHF1M= EURCHF1M= [ID:nL5E7JM0SD].
The SNB declined comment.
 The euro EURCHF= traded 0.4 percent higher at 1.1346
francs. The franc has soared to record highs against both
currencies as fear about Europe's debt crisis and the U.S.
economy pushed investors toward the traditional safe haven. A
strong franc hurts Swiss exports and tourism.
 The dollar rose slightly against the yen but remained near
its all-time low, last trading at 76.78 yen JPY=EBS.
 Credit Suisse currency strategists said that while "the
risk of intervention seems to be rising, we think the main
impact would be to slow rather than stop yen appreciation."
 Those looking for a more fairly valued safe-haven currency
should consider Norway's crown, said Lena Komileva, global head
of G10 strategy at Brown Brothers Harriman in London.
 Norway's fiscal stimulus sets it apart from indebted
countries that are being forced into austerity programs, while
a tight labor market should preclude near-term rate cuts.
 The dollar was down 0.2 percent at 5.4505 crowns NOK=.
 (Additional reporting by Steven C. Johnson; Editing by James
Dalgleish)


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