18.11.2008 13:20

FOREX. Monday summary

The yen fell against the euro as U.S. stocks erased their decline, slowing the sale higher- yielding assets funded in Japan's currency. Japan's currency earlier rose against the dollar and the euro as a drop in U.S. stocks prompted speculation that investors will unwind carry trades. The Standard & Poor's 500 Index gained 0.5 percent after falling as much as 2.8 percent. The U.S. economy will contract 0.2 percent in 2009 after growing 1.4 percent this year, according to the median estimate in a poll of business economists taken by the National Association for Business Economics. A majority of respondents said the U.K., the euro countries, Japan, Canada and Mexico are either now, or will soon be, in a recession.

The pound was the biggest gainer versus the dollar among major currencies as investors judged its first drop below $1.50 in 6 1/2 years last week as difficult to sustain.

``The recovery of the euro is closely related to the recovery of the equities,'' said Brian Dolan, chief currency strategist at FOREX.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey. ``We are seeing some adjustment taking place in those beaten-down currencies, such as the pound.''

The Group of 20 developed and emerging economies, after a summit that ended in Washington on Nov. 15, urged a ``broader policy response'' to the global slump. Losses at financial institutions totaled $964 billion since the start of last year. ``There were a lot of enthusiastic prescriptions but no specifics,'' said Andrew Busch, a currency strategist at BMO Capital Markets in Chicago.