FOREX-Yen reverses gains, but caution before U.S. jobs

By Tamawa Desai

LONDON, Feb 6 (Reuters) - The yen fell versus the dollar and euro on Friday, reversing gains as rises in stocks renewed appetite for riskier assets but caution prevailed before U.S. jobs data which will show another grim sign for the economy.

The dollar recovered against the yen from levels seen in late U.S. trade on Thursday but was still below a nearly one-month high hit as Wall Street rallied.

But traders were wary of chasing prices sharply higher ahead of data that is expected to show more than half a million U.S. jobs likely lost in January.

The U.S. unemployment rate was likely to have climbed to 7.5 percent in January, compared with 7.2 percent a month earlier, with 525,000 jobs forecast to have been shed. [ID:nN04455795]

"Payrolls are the big focus for the day," said analysts at Citigroup. "Bad news still means good news for the dollar."

At 1004 GMT, the dollar was up 0.3 percent on the day at 91.46 yen after climbing above 92 yen on Thursday. The euro was at 117.20 yen .

European shares rose 0.4 percent in morning trade .FTEU3.

Data on Friday is expected to show German industrial output fell 2.5 percent in December from the previous month.

The euro was up 0.2 percent against the dollar at $1.2812 after the European Central Bank kept interest rates unchanged on Thursday but indicated more easing next month, as widely expected.

But analysts pointed out the euro will remain under pressure as the Russian rouble's decline has prompted Russian authorities to sell euros for dollars to maintain the balance of their reserves portfolio.

The rouble tested its new trading floor against a euro-dollar basket for the first time on Thursday. It was trading just above the trading floor of 41 on Friday.

The dollar was also supported on expectations for the Obama administration's bank rescue plan to be unveiled on Monday.

"The market already expects a weak jobs report, so the financial plan on Monday will be the main driver," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

Meanwhile, sterling pared some early gains after UK industrial output weakened more than expected. It was up 0.4 percent to $1.4676 , after climbing upward after the Bank of England cut interest rates on Thursday. The euro was down 0.1 percent at 87.25 pence . (Editing by Andy Bruce)

Forex case: Four bank managers’ bail plea rejected

Updated at: 1335 PST, Friday, February 06, 2009

KARACHI: Banking crimes special court has rejected the bail application of four bank managers accused to be involved in the foreign exchange case against Khanani and Kalia Company, while FIA has been directed to submit final challan of the case by February 20. Special Court Judge, Muhammad Hussain Mallah has written in his decision that the investigating agency has collected enough materials against the petitioners Wajahat Ali, Arif ur Rahman, Masood Abbas and Taslim Ahmad and at this stage, they do not deserves bail out. However, the court ordered giving B calls in jail to all the four bank officers. Two directors of the company, Munaf Kalia and Javed Khanani were present in the court, but the third director Hanif Kalia was not brought in the court from jail, despite court orders, which the court taking serious notice ordered issuance of show cause notice to the jail superintendent.

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FOREX-Dollar climb knocks pound to 7-1/2-yr low, euro weaker

By Naomi Tajitsu

LONDON, Jan 21 (Reuters) - Sterling tumbled on Wednesday, hitting a 7-1/2-year low against the dollar, as intensified risk aversion drove investors back into the U.S. currency which reached its strongest levels against the euro in six weeks.

The pound extended deep losses on the view that an ailing UK financial sector will keep the economy weak despite bank bailouts, fiscal stimulus and drastic interest rate cuts. A surge in UK joblessness also kept sterling weak.

Economic worries around the world stung global stock markets and sliding European shares kept pressure high to dump risky assets, boosting the dollar and the yen.

"There's a lot of jitters in the financial markets, and it's taking its toll on currencies which have stressed capital financing needs and which are particularly exposed to financial sector weakness," said Phyllis Papadavid, currency strategist at Societe Generale in London.

She added that this had put sterling in the firing line, and that the euro would also continue to suffer.

Sterling was hit as UK banking shares took a beating on the view that the British financial sector continues to deteriorate despite the government's latest bank rescue plan, putting the broader economy in deep trouble.

Bank of England Governor Mervyn King said on Tuesday that the UK economy will likely shrink significantly in the first half of the year, and that policymakers need to consider using more than just interest rates to stimulate demand. [ID:nLK713961]

Economic worries were not confined to the UK, however. European shares .FTEU3 fell 1.7 percent and edged towards their lowest in nearly six years, reminding investors that the global economy is continuing to suffer despite dramatic rate cuts and fiscal stimulus plans by authorities around the world.

Sterling fell more than 1 percent to $1.3715, its weakest since mid-2001. The pair has fallen more than 7 percent so far this week, its biggest weekly slide since late October.

Sterling dropped across the board, hitting a record low of 123.01 yen against the low-yielding Japanese yen, which tends to rally during periods of risk aversion.

The euro rose more than 1 percent to 94.10 pence, its strongest since the start of the month and inched closer to a record high around 98 pence hit last month.

Despite the euro's gains against sterling, the single currency fell to $1.2845 on electronic trading platform EBS, its lowest level since Dec. 9.

This boosted the dollar across the board, pushing the U.S. currency .DXY as high as 86.504 against a basket of currencies, its highest level since early December.

Against the yen, the dollar was little changed at 89.90 yen.

"It's still a positive environment for the dollar, with equities down. The dollar and the yen are still strong in this risk-averse environment," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich.

"With other central banks cutting rates down to the level of the U.S. and Japanese central banks, there's still more downside for currencies like sterling and the euro."

UK DATA, BOE MINUTES

Keeping sterling out of favour were figures on Wednesday showing that the UK claimant count jumped by 77,900, the 11th straight month of rises, while a broad measure of unemployment rose to 6.1 percent from 6.0 percent, its highest since the three months to April 1999. [ID:nONS004013]

Minutes from the BoE's monetary policy meeting earlier this month showed that one member voted to cut rates by 100 basis points, before the central bank ultimately decided to cut by 50 basis points to 1.5 percent. [ID:nLL446707]

The UK currency's latest pummelling was sparked after the Royal Bank of Scotland announced massive losses on Monday, which reinforced investor worries about the UK's hobbling financial sector.

The euro has been hurt lately by sovereign debt rating downgrades to euro zone member nations including Spain, and deteriorating economic prospects, which analysts say could hasten monetary easing by the European Central Bank.

Speaking before a committee of the European Parliament, ECB President Jean-Claude Trichet on Wednesday played down the threat of deflation, while rebuffing rumours that some euro zone member would leave the union given the financial crisis. [ID:nLL367087]

He added that all global currencies were under pressure.

(Editing by Stephen Nisbet)

FOREX-Dollar gains, pound suffers on UK bank woes

* Pound tumbles 3.5 pct vs dollar to 7-1/2 yr low

* Euro drops to 6-week low vs dollar, dlr index at 6-wk high

* Stronger-than-expected German ZEW fails to lift euro

* UK banking woes weigh on pound; euro hit by grim outlook

(Changes byline, adds quotes, updates prices)

By Naomi Tajitsu

LONDON, Jan 20 (Reuters) - The dollar climbed broadly on Tuesday, boosted by sterling's tumble to a 7-1/2 year low on UK banking sector concerns, while the view that the euro zone will suffer a deep recession pushed the euro to a six-week low.

The dollar hit its strongest level against a currency basket since early December, with market participants also saying that euphoria ahead of Barack Obama's inauguration as U.S. president had increased short-term demand for the U.S. currency

AceTrader: Market Moving News

Gbp/usd - 1.3820 ... Investors are now expecting the Bank of England will probably soon start buying 'a rather wide range of financial assets' in an effort to increase money supply and boost the economy. The British pound rebounded fm 1.3721 on short-covering, however, selling interest is likely to emerge at 1.3840, 1.3860/65 n 1.3900. On the downside, stops are reported below 1.3715/20 but some demand is seen abv major support at 1.3682 (2001 low).

USD Surges vs GBP

The dollar surged sharply against the sterling and the euro, rallying to its highest level since June 2001 versus the pound at 1.3860 and to 1.2855 against the euro. The key highlight of the US session was the inauguration of President Obama, which had little impact on the currency market.