Forex - Pound falls to 14-month low against euro on Northern Rock's

Forex - Pound falls to 14-month low against euro on Northern Rock's
Forbes - LONDON (Thomson Financial) - The pound remained on the defensive, falling to a 14-month low against the euro, as fear gripped the UK's banking system following the news that Northern Rock has had to seek emergency funding from the Bank of England to

A bump, then gas prices could fall

A bump, then gas prices could fall
San Diego Union-Tribune - But financial markets traded more than 600 million barrels of the benchmark product on a single day this week. “The value of oil is an abstraction – the numbers are tied to investment flow, cyclical tides and fear,” Kloza wrote this week. In

Former Fed chair Greenspan criticizes Bush in book
CNBC - Greenspan built his reputation as Fed leader with his calm handling of the stock market crash of 1987, the 1997-1998 Asian and Russian financial crises, and the economic turbulence that followed the September 11, 2001, attacks on the United States

HSBC says private banking little hit by crisis: paper
Reuters - Meares said the bank was cautious with regards to the development on the financial markets in the short run. "You could expect more negative news in the near term," he said. "But we have a good feeling on the longer run. Growth of the global

THOMSON FINANCIAL NEWS TOP STORIES Macroeconomics 15:30 BST
Forbes - markets without cutting interest rates. For more information and to contact AFX: www.afxnews.com and www.afxpress.com Neither the Subscriber nor AFX News warrants the completeness or accuracy of the Service or the suitability of the Service as a

Yen Heads for Weekly Loss as Demand for Riskier Assets Resumes

Sept. 14 (Bloomberg) -- The yen headed for its first weekly loss in three against the dollar and euro as investors resumed purchases of higher-yielding assets funded by loans from Japan.

The Japanese yen fell against all 16 most-active currencies this week as global equities gained and a credit-market crisis eased in the U.S., prompting investors to re-enter so-called carry trades. The currency rose earlier today on media reports that Northern Rock Plc, the U.K.'s fourth-largest home lender, will receive emergency funds.

``The markets are calming down after the initial report of Northern Rock,'' said Masafumi Yamamoto, a currency economist at Nikko Citigroup Ltd. in Tokyo and a former Bank of Japan trader. ``Investors' risk appetite has increased this week. This led to yen-selling.''

The yen fell to 115.20 per dollar at 8:20 a.m. in London from 115.08 late in New York yesterday and 113.38 on Sept. 7. It also dropped to 160.05 per euro from 156.10 a week ago. The yen may move between 113 and 117 per dollar next week, Yamamoto said.

The yen was little changed at 233.03 per British pound, paring an advance of as much as 0.9 percent. The Bank of England will provide Northern Rock with a short-term credit line to keep it operating, on which the firm will pay an interest-rate ``premium,'' the company said.

Asian Shares Gain

The Australian dollar, a favorite of carry trades, rose to 97.10 yen from 93.72 a week ago. New Zealand's dollar, also popular for carry trades, climbed to 82.42 yen from 78.36 on Sept. 7. The Standard & Poor's 500 Index climbed 0.8 percent yesterday and the Morgan Stanley Capital International Asia- Pacific Index of regional shares advanced 1.6 percent today.

Investment trusts will market more than 2.4 trillion yen ($21 billion) of mutual funds this month that aim to buy foreign assets, according to data compiled by Bloomberg. The odds the Bank of Japan will lift the overnight lending rate on Sept. 19 fell to zero this week, based on calculations by Credit Suisse Group using overnight interest-rate swaps.

``Sales of investment trust funds are not so bad,'' said Kei Katayama, who helps oversee the equivalent of about $1 billion at Daiwa SB Investments Ltd. in Tokyo. ``Japanese retail investors are still sending money abroad constantly, stemming an appreciation of the yen,'' which may fall to 118 per dollar by year-end, he said.

Interest-Rate Gap

Japan's 0.5 percent interest rate compares with 4 percent in Europe, 5.25 percent in the U.S., 5.75 percent in the U.K., 6.5 percent in Australia and 8.25 percent in New Zealand.

In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency moves erase those profits.

One-month implied volatility for the yen rose to 11.70 percent, from 11.38 percent yesterday. Dealers quote implied volatility, a gauge of expectations for exchange rate moves, as part of pricing options.

Smaller Cut?

The U.S. currency is set to snap two weeks of losses versus the yen on signs the U.S. economy can withstand the subprime- mortgage crisis, backing the case for the Federal Reserve to lower interest rates by less than a half percentage point.

The dollar also trimmed this week's decline to 0.6 percent versus the euro to trade at $1.3884, rebounding from a record low. The Commerce Department may say at 8:30 a.m. in Washington that retail sales rose 0.5 percent in August after a 0.3 percent increase the prior month, according to a Bloomberg News survey of economists.

``The report may show personal spending is solid and add to expectations the Fed won't have to cut rates by 50 basis points,'' said Seiichiro Muta, director of foreign exchange at UBS AG in Tokyo. ``The dollar may strengthen'' to 115.65 yen and $1.3815 per euro today, he said.

Interest-rate futures show traders pared bets on a half- percentage-point cut by the Fed at the Sept. 18 meeting to 58 percent from a 76 percent chance a week ago. The yield spread between two-year U.S. and Japanese bonds widened to 3.21 percentage points from 3.08 percentage points a week ago.

Bloomberg News: Dollar Falls to Month Low Versus Euro on Growth, Rate Views

The dollar fell to the lowest in a month versus the euro as traders bet the Federal Reserve will cut interest rates next week while the European Central Bank may boost borrowing costs by year-end.

U.S. companies unexpectedly shed jobs in August for the first time in four years, the Labor Department said Sept. 7, prompting traders to add to bets the Fed will reduce rates to 4.75 percent by Sept. 18. Two-year German government bonds yielded more than comparable-maturity U.S. Treasuries for a second trading day.

``The U.S. job losses certainly don't bode well for the prospect of the dollar, and have taken all doubt away from whether the Fed is going to cut or not,'' said David Powell, a currency strategist at IDEAglobal in New York. ``The U.S. is slowing down, while the euro zone is still strong. We are in a state of dollar weakness.''

The dollar fell to $1.3811 per euro at 9:22 a.m. in New York, after earlier touching $1.3816, the lowest since Aug. 9, from $1.3768 on Sept. 7. That compares with the record low of $1.3852 reached July 24. The U.S. currency bought 113.78 yen, from 113.38. The euro traded at 157.18 yen, from 156.10.

The U.S. dollar index comparing the currency with its six primary peers, including the pound and yen, fell to as low as 79.814, the weakest in 15 years, from 79.959 on Sept. 7.

``The dollar has gone from being a safe-haven currency to a U.S.-centric currency,'' said Mitul Kotecha, head of currency strategy at Calyon. ``The issues with the jobs numbers and weaker data in general have raised a lot of concerns about the impact of U.S. growth, and that has hit the dollar.''

Payrolls Report

U.S. nonfarm payrolls decreased by 4,000 in August from a revised gain of 68,000 a month earlier, the Labor Department in Washington said on Sept. 7. It compared with the median forecast of a 100,000 increase in a Bloomberg News survey of 88 economists. The unemployment rate held at 4.6 percent.

Interest-rate futures show a 70 percent chance the Fed will cut borrowing costs to 4.75 percent from 5.25 percent at its Sept. 18 meeting, up from 46 percent a week ago.

Investors are increasing bets the ECB will lift borrowing costs by year-end from 4 percent. The implied yield on the December futures contract rose 4 basis points, or 0.04 percentage point, to 4.49 percent. The contract settles to the three-month interbank offered rate for the euro, which has averaged about 16 basis points above the ECB key rate since 1999.

U.S. Versus Germany

The difference in yields between two-year U.S. Treasuries and comparable-maturity German bunds fell 13 basis points last week. German securities had a higher yield than their U.S. counterparts during a second day for the first time since 2004.

The dollar extended its gains versus the yen after Fed Bank of Atlanta President Dennis Lockhart said data now show job growth started weakening in June and declined to stick with his assessment that there are no ``conclusive'' signs of a slowdown beyond housing.

San Francisco Fed President Janet Yellen will speak at 8 a.m. San Francisco time. Dallas Fed President Richard Fisher will speak at noon San Antonio, Texas, time. New York Fed Governor Frederic Mishkin speaks on the economic outlook at 7:30 p.m. in New York.

Bloomberg news: Dollar