By Don Curren 
   Of DOW JONES NEWSWIRES 
 

TORONTO (Dow Jones)--The U.S. dollar remains sharply higher Tuesday as credit concerns in Austria and Greece continue to hurt the euro.

Confidence in an economic recovery in the U.S. and conjecture the Federal Reserve Board could acknowledge a rosier outlook also underpinned the greenback. The Fed began its two-day open market committee meeting Tuesday, and will issue its statement Wednesday.

Pervasive worries about debt weighed on a range of other risk-sensitive currencies Tuesday, including the Australian and Canadian dollars.

Tuesday morning, the dollar had risen to Y89.91 from Y88.61 late Monday in New York, according to EBS via CQG. The euro fell to $1.4515 from $1.4651 and was at Y130.53 from Y129.81. The dollar was also up at CHF1.0419 from CHF1.0323, while the pound has fallen to $1.6235 from $1.6300.

The Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 77.030 from 76.349.

The euro sank in New York trading to a session low at $1.4514, its lowest level since Oct. 2, according to EBS via CQG.

Options-related activity helped to contain the beleaguered euro`s losses, keeping it above the $1.4500 area for now, said Steve Butler, director of foreign exchange at Scotia Capital in Toronto.

"There`s a rumor there`s another option barrier down at $1.4500," Butler said. "I still think the market is hungry to buy the dollar on dips."

The debt situation for some euro-zone member countries has become a significant drag on the single currency. The Greek government`s efforts to grapple with its fiscal situation failed to provide much reassurance to investors.

Worries about the euro-zone financial system were amplified by the surprise nationalization Monday of Hypo Group Alpe Adria by the Austrian government. The multibillion-euro bailout came after European Central Bank President Jean-Claude Trichet personally intervened, urging swift action to prevent contagion through the country`s entire banking system.

Currency strategists at RBC Capital Markets said the Swedish krona suffered hardest on the back of Austria`s nationalization of Hypo Bank, as fears spread on the health of loans in Eastern Europe.

Scotia`s Butler said some of the fears about Austria`s banking sector were assuaged by the Austrian central bank`s efforts Tuesday to calm worries that Oesterreichische Volksbanken AG (VBPS.VI) was in trouble.

Austrian daily Die Presse reported Tuesday that the Austrian National Bank and financial market watchdog FMA had put Volksbanken on a "watchlist" for endangered financial institutes. Volksbanken and the Austrian National Bank both denied there was such a watchlist and insisted on the health of the country`s banking system. Jitters still remained for European investors who have seen, despite many official reassurances, meltdowns in financial markets during the global credit crunch the past two years.

The dollar typically rallies when such concerns intensify because of its status as a safe-haven currency.

"I think there`s going to be strength in the dollar," said C.J. Gavsie, managing director, corporate and institutional foreign exchange sales at BMO Capital Markets in Toronto. "There`s still apprehension out there going into year end."

The Greek government`s efforts to grapple with its fiscal situation failed to provide much reassurance to investors.

The dollar is also benefiting from the news that Wells Fargo (WFC) has joined Citigroup (C) in repaying its emergency bailout loans from the U.S. government. The repayment indicates that the banking system continues to rebound as the U.S. recovers from last year`s credit crunch crisis.

The dollar also prospered against the yen Tuesday as bond yields in the U.S. shifted higher, said Scotia`s Butler.

"The yield play is a big driver there," he said.

-By Don Curren, Dow Jones Newswires; 416-306-2020; don.curren@dowjones.com

(Flemming E. Hansen and Digby Larner in Vienna contributed to this article.)

Click here to go to Dow Jones NewsPlus, a web front page of today`s most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=gHCIfZmwglmkdJuxz2PJUA%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

December 15, 2009 12:22 ET (17:22 GMT)

 
   By Bradley Davis 
   Of DOW JONES NEWSWIRES 
 

NEW YORK (Dow Jones)-- The euro is rallying against the dollar, but remains down against the yen after U.S. economic data released Wednesday painted a picture of a slowly improving economy.

That the economy is not getting better as quickly as investors had hoped is causing a correction in equity and currency markets, said Kathy Lien, chief strategist at Global Forex Trading in New York.

Concerns over a global economic recovery, stoked by worse-than-expected economic data, mean currency traders are employing a "risk-off" strategy. As U.S. equities hover between positive and negative territory, currencies are tracking stocks, which is why the euro is showing some strength against the dollar as stocks try to solidify their march into positive territory, she said.

Still, investors are unsure enough of where the economy is going, which is keeping them in the safe-haven yen.

"The yen is the main beneficiary of the return of risk aversion, while the US dollar is not far behind." Vassili Serebriakov, currency strategist at Wells Fargo in New York.

A disappointing private-sector jobs report sent a new wave of risk aversion through the market, though the knee-jerk reaction to the numbers still had currencies trading within their well-worn ranges. The euro had dropped to an intraday low of $131.01 against the yen, but has since recovered some of its losses.

Automatic Data Processing released its private sector jobs report Wednesday, showing 298,000 jobs were lost in August, a worse-than-expected number. Economists surveyed by Dow Jones Newswires had forecast the data to show 213,000 jobs lost in the month, compared to July`s contraction of 371,000.

Another report showed U.S. productivity accelerated in the second quarter to post its biggest gain in nearly six years. Despite a steep decline in output, non-farm business productivity rose 6.6% at an annual rate last quarter, the most since the third quarter of 2003, the Labor Department said. Economists surveyed by Dow Jones Newswires had predicted a 6.5% gain.

In other economic news released Wednesday, demand for U.S. factory goods in July climbed 1.3%, the fourth-straight increase. Some economists said the data indicates the manufacturing recession has ended, but the number disappointed Wall Street forecasters, who had called for a 2.3% increase.

The mixed economic data is causing nervousness among traders, Lien said. Currency markets will continue to follow the lead of equity markets, which typically are bearish in September, Lien said.

Late Wednesday morning in New York, the euro was at $1.4249 from $1.4217 late Tuesday, according to EBS via CQG. The dollar was at Y92.48 from Y92.93. The euro was at Y131.60 from Y132.12. The U.K. pound was at $1.6257 from $1.6166, and the dollar was at CHF1.0640 from CHF1.0663.

In light summer currency trading, the effects of single trades can have outsize influence, leading to choppy, unpredictable markets.

Markets continue to wait for Friday`s U.S. non-farm payrolls report, which some analysts said could break currencies from their recent well-worn ranges, though most expect currencies to remain rangebound until after the U.S. Labor Day holiday.

Whether Friday`s numbers improve, jobs are still being shed, which puts a crimp on consumption, something economists said is key to a full recovery from the recession.

Improvements in job numbers in past months led some analysts to predict currency would trade based on economic fundamentals, as opposed to the risk-based trading the market currently sees.

"It was the last payrolls that helped to drive sentiment that the risk trade was a thing of the past and that the [dollar] would now become better supported by improving economic fundamentals. This was subsequently shown to be too optimistic," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.

(Maya Jackson Randall in Washington and Riva Froymovich in New York contributed to this report.)

-By Bradley Davis, Dow Jones Newswires; (212) 416-2654; bradley.davis@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today`s most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=7vCNYoNKp8EfgGw9Wn0A4A%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

September 02, 2009 11:34 ET (15:34 GMT)

 
   By Bradley Davis 
   Of DOW JONES NEWSWIRES 
 

NEW YORK (Dow Jones)--The euro is down against the yen and dollar after Wednesday morning`s ADP payrolls report showed a greater loss of U.S. private-sector jobs than had been expected.

The disappointing jobs numbers sent a new wave of risk aversion through the market, though the knee-jerk reaction to the numbers still had currencies trading within their well-worn ranges.

Automatic Data Processing released its private sector jobs report Wednesday, showing 298,000 jobs were lost in August, a worse-than-expected number. Economists surveyed by Dow Jones Newswires had forecast the data to show 213,000 jobs lost in the month, compared to July`s contraction of 371,000.

A stream of positive economic data, including Tuesday`s release of a report showing an uptick in U.S. manufacturing, had not been enough for investors to be sure of a full economic turnaround, analysts said. Wednesday`s jobs report will only add uncertainty to the outlook for recovery.

"In our view, three main obstacles have to be overcome for this recovery to be sustainable: job market uncertainty, uncertainty over the rebound of bank credits, and uncertainty over the pace of monetary normalization/tightening," said analysts at Calyon Credit Agricole.

Currency markets continue to follow the lead of equity markets, which analysts said remain unsure of a global economic recovery.

Early Wednesday morning in New York, the euro was at $1.4208 from $1.4217 late Tuesday, according to EBS via CQG. The dollar was at Y92.44 from Y92.93. The euro was at Y131.40 from Y132.12. The U.K. pound was at $1.6221 from $1.6166, and the dollar was at CHF1.0665 from CHF1.0663.

The safe-haven U.S. dollar also hit session high against the New Zealand dollar and Canadian dollar, considered to be riskier, commodity-based currencies.

In light summer currency trading, the effects of single trades can have outsize influence, leading to choppy, unpredictable markets.

Markets continue to wait for Friday`s U.S. non-farm payrolls report, which some analysts said could break currencies from their recent well-worn ranges, though most expect currencies to remain rangebound until after the U.S. Labor day holiday.

Whether Friday`s numbers improve, jobs are still being shed, which puts a crimp on consumption, something economists said is key to a full recovery from the recession.

Improvements in job numbers in past months led some analysts to predict currency would trade based on economic fundamentals, as opposed to the risk-based trading the market currently sees.

"It was the last payrolls that helped to drive sentiment that the risk trade was a thing of the past and that the [dollar] would now become better supported by improving economic fundamentals. This was subsequently shown to be too optimistic," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.

Tuesday`s U.S. stock selloff, which shaved 2% off the Dow Jones Industrial Average, led investors out of the high-yielding euro and into the safe-haven dollar and yen.

The selloff continued overnight in Asia, where the euro and dollar fell to fresh seven-week lows against the yen as investors wary of further falls in global share prices bought the safe-haven Japanese unit.

That drove the euro to Y131.47, its lowest level since July 15. The selling also weighed on the dollar, which fell to Y92.51, its lowest since July 13.

In European mid-day trading, improving stocks stopped the risk currencies slippage. The euro settled above 1.42 and the pound held above its overnight low of 1.6113. The dollar recovered from its 7-week low of Y92.68. European bourses were around 0.5% lower after dropping 1% earlier in the session.

Canada Morning

The Canadian dollar is slightly lower in subdued and directionless trading Wednesday morning. The U.S. dollar was trading at C$1.1060 from C$1.1045 late Tuesday.

While trading has been relatively constrained so far, the whipsaw movements on violent fluctuations in broader risk appetite witnessed Tuesday can`t be ruled out again Wednesday, said a report from BMO Capital Markets.

BMO said the announcement Tuesday from the Canada`s main opposition party, the Liberals, that they will no longer support the minority Conservative government is probably going to keep "anything resembling significant and sustained (Canadian dollar) strength in check" until political developments become clearer.

There are no significant Canadian data releases Wednesday, but some market watchers suggested U.S. Energy Department oil inventory data scheduled for release at 10:30 a.m. EDT (1430 GMT) could have an impact on the currency.

 
(Andrew Monahan in Tokyo, Nicholas Hastings in London, Don Curren in Toronto and Riva Froymovich in New York contributed to this report.) 
 

-By Bradley Davis, Dow Jones Newswires; (212) 416-2654; bradley.davis@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today`s most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=7vCNYoNKp8EfgGw9Wn0A4A%3D%3D. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

September 02, 2009 08:54 ET (12:54 GMT)