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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: CapitalistHogg™ who wrote (16811)	11/26/2004 2:20:58 AM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 116555

CNBC Europe claim that ECB will intervene strongly to lower the EUR/USD. Dollar Falls After Report Says China Reduced U.S. Bond Holdings Nov. 26 (Bloomberg) -- The dollar fell to a record against the euro and its lowest in almost five years versus the yen after a report said China had cut its holdings of U.S. Treasuries. China cut the U.S. bonds in its foreign exchange reserves to avoid losses from a weakening dollar, China Business News said, citing Yu Yongding, a member of the central bank's monetary policy committee. China declined to comment on the report, which comes three days after Russia's central bank said it may trim its U.S. currency holdings. ``People have been thinking that central banks in the past year or so have been reducing their U.S. dollar holdings and this confirms what's been going on,' said John Kyriakopoulos, a currency strategist at National Australia Bank Ltd. in Sydney. The possibility of the dollar falling to $1.35 is ``pretty imminent,' Kyriakopoulos said. The dollar fell to a record $1.3335 and traded at $1.3327 at 3:19 p.m. in Tokyo, from $1.3269 late yesterday in New York, according to electronic currency-dealing system EBS. It also fell to 102.26 yen, having reached 102.01, the weakest since January 2000, from 102.46 yen. The U.S. currency headed for its biggest losing week against the euro since May 2003. It also headed for a ninth week of declines against the yen, the longest such streak since April 1995, in the absence of policy makers stopping its descent. `No Escape' China was the second-largest foreign holder of U.S. Treasury securities as of the end of September, behind Japan, according to the Treasury Department. The country held $174.4 billion of U.S. notes and bonds at the end of September, 19 percent more than a year earlier and more than triple the level five years ago, according to figures from the Treasury Department. ``If China was really to sell Treasuries, the dollar will definitely get hurt even more,' said Stuart Goh, who helps oversee $117 million at Pacific Asset Management Ltd. in Singapore. ``Everyone is trying to find some kind of an excuse or news to sell more dollars, even at these levels.' Bank of England Chief Economist Charlie Bean said foreigners are unlikely to go on buying U.S. assets indefinitely resulting in a ``possibly substantial' drop in the dollar. ``There's no escaping a weaker dollar,' said Ashley Davies, currency strategist in Singapore at UBS AG, the world's largest currency trader. ``A lack of faith in the dollar by central banks reaffirms our bearish stance.' UBS this week lowered its three-month dollar projections to 103 yen from 107, and to $1.36 per euro from $1.30. Treasuries Fall ``At some stage action will have to be taken to close the U.S. fiscal deficit and, when that happens, the real value of the dollar will have to fall if a sharp slowdown is to be avoided,' Bean yesterday told business leaders in Colchester, England. His comments echoed remarks by Federal Reserve Chairman Alan Greenspan, who on Nov. 19 said foreign investors may ``eventually adjust their accumulation of dollar assets' given the record U.S. current account deficit. Since then, the dollar has fallen 2.3 percent against the euro and 1.5 percent versus the yen. The 4 1/4 percent note maturing 2014 fell 12/32, or $3.75 cents per $1,000 face amount, to 100, according to bond broker Cantor Fitzgerald LP. Its yield rose 5 basis points to 4.25 percent. A basis point is 0.01 percentage point. In other trading, the dollar also fell to 1.1341 Swiss francs, from 1.1389 francs. The British pound rose to $1.9027, from $1.8930. ----With Taizo Hirose in Tokyo and Yumi Kuramitsu in Hong Kong and reporting by Christina Soon in Singapore. Editors: Grose- Hodge To contact the reporter on this story: John Brinsley in Tokyo at jbrinsley@bloomberg.net. To contact the editor responsible for the story: Beth Thomas in Tokyo at Bthomas1@bloomberg.net Last Updated: November 26, 2004 01:23 EST