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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (28936)	6/2/2010 9:09:11 AM
From: RockyBalboa	Respond to of 71445

of course, and since this factor is petering out the GBP undid all gains and then some today, moved back below 1.46 from high 1.47s in 5 hours. Lots of hangover after last days squeeze.

To: ggersh who wrote (28936)	6/2/2010 10:57:15 AM
From: RockyBalboa	Read Replies (3) \| Respond to of 71445

As you asked, here is: >>> Sterling slips as corporate demand evaporates * Early gains related to Pru/AIG collapsed deal evaporate * Focus back on pound/dollar sensitivity to risk * Technical break vs euro favours further sterling gains By Neal Armstrong LONDON, June 2 (Reuters) - Sterling fell on Wednesday after the one-off positive currency effects from the collapse of Prudential's attempt to buy AIG's Asian arm subsided and focus moved back to the pound's sensitivity to risk. The pound rose broadly in early trade after British insurer Prudential plc <PRU.L> said it was withdrawing from a $35.5 billion deal to buy American International Group Inc's <AIG.N> Asian life insurance business AIA. [ID:nTOE65100R] Traders said Prudential had put in place a series of currency hedges, selling sterling against the dollar, when the initial bid was announced in March and these positions had to be unwound. But the positive effects of these flows evaporated over the course of the day. "Sterling has settled down after being driven by alleged flows from the corporate sector over recent sessions. There's been some unwinding of short-term positions related to these expected flows over the course of the day," said Paul Robson, currency strategist at RBS. At 1402 GMT, sterling was trading down around 0.4 percent on the day versus the dollar <GBP=D4> at $1.4580, having risen as high as $1.4771 in early trade. "Focus is now back on to the risk environment," added RBS's Robson, noting the dollar was trading with broad gains as European stocks <.FTEU3> traded down around 0.8 percent. "There is no new domestic political or economic development to justify the rally of the past few sessions, which is why we would call for caution on the bullish cable trade," said Audrey Childe-Freeman, senior currency strategist at Brown Brothers Harriman. Versus the euro <EURGBP=D4>, sterling also eased after hitting an 18-month high of 82.80 pence in early dealing to trade around 83.65 by mid-afternoon. Traders said there were still significant stop-loss orders building underneath 82.80 and that the technical picture was positive overall for sterling versus the euro. "There's been a shift in the technical complexion for sterling versus the euro and that should be quite supportive," said Credit Agricole CIB's deputy head of foreign exchange research Daragh Maher. "My year-end target for euro/sterling is 80 pence," he added. Sterling also eased from an early four-month high versus a currency basket <=GBP> of 80.80 to stand at 80.30, according to Bank of England data. British mortgage approvals rose slightly more than expected in April, but unsecured lending fell for the first time since November, BoE data showed. Separate figures from the central bank showed its preferred money supply gauge -- M4 excluding intermediate other financial corporations -- slowed sharply in April to 0.3 percent on the month. ((neal.armstrong@thomsonreuters.com; Reuters Messaging: neal.armstrong.reuters.com@reuters.net; +44-207-542-0876, editing by Nigel Stephenson)) Keywords: MARKETS STERLING/CLOSE