Piagi Reports: The Pound and Euro drop in Forex
Posted by David Clingerman on Wed, Jan 25, 2012 @ 10:26 AM
Here are the current interbank forex rates at this moment today, the 25th of January, 2012:
Financial News:
The euro fell for the first time in three days versus the dollar after the European Central Bank was said to oppose restructuring its Greek bonds, adding to concern the nation will fail to win a deal to reduce its debt.
The yen reached its weakest level in almost two months against the U.S. currency after Japan reported its first annual trade deficit in 31 years, stoking concern the country’s fiscal health may deteriorate. South Korea’s won was the best performer versus the dollar as exporters converted their foreign exchange to meet month-end cash demand. The dollar gained against most its major counterparts as Federal Reserve policy makers prepared to give projections for borrowing costs for the first time.
The 17-nation euro slid 0.6 percent to $1.2964 at 10:44 a.m. New York time. It reached $1.3063 yesterday, the highest level since Jan. 4. The yen depreciated 0.8 percent to 78.28 per dollar, the weakest since Nov. 29. The euro gained 0.2 percent to 101.51 yen.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, rose 0.5 percent to 80.211, before Federal Reserve policy makers decide on interest rates.
The Fed said last week it will provide two charts with forecasts for the benchmark rate after the Federal Open Market Committee meeting today. The central bank left the target for overnight loans between banks in a range of zero to 0.25 percent last month and reiterated that economic conditions may warrant “exceptionally low” rates “at least” through mid-2013. It will keep the key rate unchanged today, according to a Bloomberg survey.
The pound fell 0.3 percent to $1.5580 after a report showed U.K. gross domestic product contracted 0.2 percent from the third quarter, compared with a drop of 0.1 percent forecast by 33 economists in a Bloomberg News survey.
The declines in sterling were limited after Bank of England Governor Mervyn King said yesterday that policy makers can increase stimulus again if needed to guard against a “renewed severe downturn.”
It gained 0.2 percent to 83.24 pence per euro.
While the ECB faces pressure to join private-sector investors in taking losses on Greek securities, the central bank sees this as potentially damaging to confidence in the institution, according to two people familiar with the Governing Council’s stance, who declined to be identified because the matter is confidential.
The cost to protect against a drop in the euro against the dollar increased for a fourth day. Risk-reversal rates for three-month options on the euro versus the dollar were negative 1.66 percent today from negative 1.65 percent yesterday. It has climbed from as low as negative 4.4 percent in November.
Implied volatility of three-month options of Group of Seven currencies rose to 10.66 percent, the most since Jan. 17, according to the JPMorgan G7 Volatility Index. An increase makes investments in currencies with higher benchmark lending rates less attractive as the risk in such trades is that market moves will erase profits.
