The dollar pared losses against the yen and reversed its advance versus the euro.
The dollar traded at 101.38 yen by 11:53 a.m. in London, after falling
to as low as 100.95 yen. Against the euro, it fell to $1.3670, from
$1.3619 yesterday. U.S. retail sales fell 0.7 percent in September
following a 0.3 percent drop the prior month, according to the median
estimate of economists surveyed by Bloomberg News. The Commerce
Department releases the data at 8:30 a.m. in Washington. Figures on
Oct. 17 may show housing starts fell to a 17-year low.
Britain's pound rose for a third day against the dollar and traded near the highest level in a week versus the euro.
The government's plan to invest 37 billion pounds ($64 billion) to
rescue Royal Bank of Scotland Group Plc, HBOS Plc and Lloyds TSB Group
Plc helped drive the pound yesterday to its biggest two-day gain since
2005 versus the dollar.
The euro may drop 13 percent versus the yen as global credit markets
will remain depressed even after U.S. and European officials made as
much as $3 trillion available to unclog lending, Citigroup Global
Markets Inc. said.
The euro may fall as low as 120 yen by the end of 2008 as investors
favor the relative safety of the Japanese currency, reinforcing
technical charts that signal the euro is vulnerable, said Tom
Fitzpatrick, global currency head of strategy at Citigroup Global
Markets in New York. The euro traded at 138.89 yen at 7.58 a.m. in
Tokyo, from 139.04 yen yesterday.
Rising borrowing costs are causing a reduction in carry trades, where
investors get funds in nations such as Japan that have low borrowing
costs and buy assets where returns are higher. The risk is that
currency moves erase profits.
EUR/USD the pair has become stronger but could not overcome resistance on $1,3680 then down in area $1,3630.
GBP/USD the rate has shown session high not far from a mark $1,7600 then it has continued to be consolidated in the field of $1,7550.
USD/JPY the pair continues to test support in the field of Y101,10 (38,2% FIBO growth Y97,80-Y103,10).
At 1230GMT with the NY Fed Empire State Survey for October, Retail
& Food Sales and PPI for September. The Empire State Index is
expected to fall to a reading of -10.0 in October after tumbling to
-7.41 in the September.
Retail sales are expected to fell 0.7% in September, as industry
vehicle sales slowed in the month. Sales excluding vehicles is expected
to fall 0.3% on another soft reading for gasoline.
PPI is expected to fall 0.5% in September after the 0.9% drop in
August. Energy prices fell further in the month, while core PPI is
expected to rise 0.2%.
At 1400GMT is expected to show business inventories rise 0.5% in
August. Factory inventories were already reported up 0.6%, while
wholesale inventories were already reported up 0.8%.