John, do not fight the tape..US market (except commodities)
bonds including is Kaput, finished.....All that is left is final bubble burst..first dollar tanks, than equities...Capital had enough of this nonsense-Asia, Europe, commodities new cycle started..Oil? at least $28...
Al Gore is finished, retired -during democratic primaries ..
Yen Rises to 40-Mo High as Report Fans Rate Concern (Update1)
(Adds comments from Treasury Secretary Lawrence Summers.
Updates rates.)
New York, Sept. 14 (Bloomberg) -- The yen touched a 40-month
high against the dollar after a U.S. retail sales report kindled
concern the Federal Reserve may raise interest rates again, and
as traders dismissed Japan's efforts to stem the yen's gains.
``It will be difficult to see a big dollar rally' as
prospects for higher rates will likely hurt U.S. stocks and
bonds, reducing demand for the dollar, said Ram Bhagavatula,
chief economist at Natwest Global Financial Markets.
The dollar pared some of its losses after Treasury Secretary
Lawrence Summers said the U.S. continues to favor a strong
dollar.
The yen rose to 105.97 per dollar from 106.65 yesterday, and
briefly climbed as high as 105.18, its strongest level since
104.80 yen on May 14, 1996.
The dollar briefly rebounded above 106 yen after Summers
spoke to reporters following a Capitol Hill news conference. ``I
don't have any comment beyond reaffirming the constancy of our
policy,' Summers said, when asked whether the U.S. had changed
its strong dollar policy.
Japan's currency rose to 109.505 per euro, up from 111.210
yesterday. It reached a new high against the 8 1/2-month old
single European currency, of 108.945 per euro. Against the German
mark, the yen touched a record low of 55.72 per mark from 56.86
yesterday.
The dollar's earlier losses accelerated as its descent
triggered automatic sell orders placed below the 105.69 yen
level, traders said. That level represented a 61.8 percent
retracement of the dollar's climb from its postwar low of 79.75
yen in April 1995, to its eight-year high reached in August 1998,
of 147.66 yen.
Retracement
Many traders look to these so-called ``Fibonacci'
retracement levels as an indication of where exchange rates are
headed.
The Bank of Japan sold yen on behalf of the Ministry of
Finance earlier, briefly weakening the currency to 107.21 per
dollar, only about 1 percent higher than the level prior to the
intervention. The intervention follows its sales of about $3
billion Friday.
The dollar fell, along with declining stocks and bonds,
after a report showing U.S. retail sales posted their biggest
jump in six months in August. Retail sales rose 1.2 percent last
month, the government said, compared to the 0.7 percent jump
forecast by economists in a Bloomberg News survey.
The dollar didn't get any help, either, from a report that
the U.S. posted a $80.7 billion current account deficit in the
second quarter, $1.4 billion larger than expected.
A widening deficit spells trouble for the dollar as it
leaves more of the currency in the hands of foreign investors and
corporations, who may then sell it to repatriate proceeds. That
threat becomes more likely given weakness in U.S. financial
assets.
Thirty-year Treasuries fell 7/8, pushing yields up 6 basis
points to 6.11 percent. The Dow Jones Industrial Average dropped
0.66 percent to 10,957. Expectations that stocks and bonds will
weaken further dims demand for the dollar as well.
Federal Reserve policymakers have raised interest rates
twice since June 30, and today's report kept alive concern they
may have to raise them again to keep inflation subdued. The
policy-setting Federal Open Market Committee next meets Oct. 5.
Euro Little Changed
The euro fell against the dollar, to $1.0347, from $1.0424
yesterday and not far above yesterday's eight-week low of
$1.0302.
The dollar has shed 6.8 percent against the yen this year on
expectations Japan is emerging from an economic slump.
Yen strength is ``a powerful trend that's intact,' said
James Culnane, a trader at Norddeutsche Landesbank. Given that
the yen continues to rise past points that sparked Japan's yen-
selling, ``it doesn't appear to be having any effect.'
Foreign investors have bought a net $26 billion of Japanese
stocks since June 10, when the government released faster-than-
expected economic growth figures for the January-March quarter.
The yen has gained since that report's release, as
investment flows outweighed central bank sales of the currency
estimated by traders to total more than $35 billion.
``I don't think anything is going to really stop the yen's
strength at the moment,' said Steve Barrow, a strategist at Bear
Stearns International in London. ``Foreign investors can't get
enough of Japanese assets, particularly stocks.' Demand for yen
will push the currency to 100 per dollar in the weeks ahead, he
said.
`Appropriate Actions'
Japanese officials are concerned that a stronger yen could
slow an economic recovery by making Japanese goods more expensive
overseas. Chief Cabinet Secretary Hiromu Nonaka highlighted those
worries today and said ``I expect appropriate actions will be
taken from here on as well.'
U.S. and European investors have snapped up yen in recent
weeks to invest in Japan, encouraged by evidence the world's
second-largest economy is pulling out of recession.
More evidence pointing to a rebound came Thursday when the
government said the economy unexpectedly grew 0.2 percent in the
April-June quarter, contrary to analysts' expectations for a 0.3
percent contraction.
In other trading, the dollar was little changed against the
British pound, at $1.6069 per pound, from $1.6077 yesterday. It
rose against the Swiss franc, to 1.5496 francs from 1.5410, and
gained against the Canadian dollar, to 1.4740 per Canadian
dollar, from 1.4690.
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