LONDON (Dow Jones)--Two hotel bombs in Jakarta, the increased risk of CIT Group declaring bankruptcy and worries over more corporate earnings reports due later in the day knocked global risk appetite lower and pushed the dollar and the yen higher in Europe Friday.
Forecasts that U.S. data at 1230 GMT will show housing starts remained static last month, and the upcoming weekend also appeared to have encouraged profit-taking.
For most of this week, the dollar and the yen had been under pressure as stronger than expected second-quarter earnings lifted market sentiment.
This trend continued Thursday with strong results from JPMorgan, Google and IBM. However, concern about the U.S. economy started to reemerge when the latest survey from the Philadelphia Fed showed an unexpected decline in activity.
With the housing starts figures expected to show no increase last month after a 17.2% rise in May, analysts warn that the market may not be taking the U.S. recovery for granted.
"Bad Philly Fed figures led to a partial correction and still poor U.S. housing data may spur some further book squaring regardless of the new wave of second-quarter earnings expected today," said the currency strategy team at UniCredit Markets & Investment Banking.
Among the earnings reports that are likely to grab market attention are ones from Citigroup, Bank of America and GE.
Apart from them, the market remains highly sensitive to the prospects of CIT Group now that government bailout talks have failed and the lender looks set to declare bankruptcy.
The underlying firm tone of currency markets was also eroded by the reports of two hotel bombs in Jakarta, which have been said to have killed nine people and injected new fears of terrorist attacks.
Despite all these concerns, however, equity markets retained some composure. European stocks gained as much as 1.2%, following on from the 0.6% rise posted by the Nikkei and the 1.2% rally in the Dow Jones Industrial Average.
By 0925 GMT, the dollar had reached Y93.78 from Y93.75 late Thursday in New York, according to EBS.
The euro fell to $1.4101 from $1.4145 and to Y132.27 from Y132.63.
The dollar was also up at CHF1.0776 from CHF1.0735. The pound was a major loser, falling to $1.6307 from $1.6450 as the rising number of cases of swine flu brought fears that the U.K.'s gross domestic product will be hit.
See chart at
http://www.dowjoneswebservices.com/chart/view/2454
In eastern Europe, currencies were mixed. The euro was down at HUF274.08 from HUF274.37. However, it was up at PLZ4.3189 from PLZ4.3141 and at CZK25.951 from CZK25.899.
-By Nicholas Hastings, Dow Jones Newswires; 44 20 7842 9493; nick.hastings@dowjones.com
TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkBackEurope@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments.
Courtesy: Wall Street Journal - Nicholas Hastings - Jul 17, 2009
Subscribe to:
Post Comments (Atom)
Post a Comment