MisterFund dot com

TOKYO (Thomson Financial) - The US dollar was firmer against other major currencies in Asian morning trading Monday, continuing its rebound late last week, but was held within narrow ranges, with Asian players unwilling to move the market because of a lack of fresh trading leads and in the absence of players from further afield because of public holidays.

At 9.41 am (0041 GMT) in Tokyo, the dollar was at 99.77 yen, compared to 99.56-99.66 yen in late trading in New York last week. The euro was at 1.5403 dollars, compared to 1.5426-1.5436 dollars in New York.

The US currency was well bid after a survey showed last week that Philadelphia-area manufacturing activity was not as weak as expected and commodity prices continued to fall.

The Federal Reserve Bank of Philadelphia said its Philly Fed manufacturing index improved to minus 17.4 in March from minus 24.0 in February. The median estimate for this month among economists surveyed by IFR Markets was minus 20.0.

But investors are now awaiting more US economic data, including the release later today of the National Association of Realtors existing home sales figures and the S&P/Case-Shiller home price indices on Tuesday.

‘The recent rebound of the dollar reflected partly the market’s view that the credit crunch might have passed through its very worst phase following the bailout of Bear Stearns by JP Morgan,’ said Ryohei Muramatsu, head of Group Treasury Asia at Commerzbank in Tokyo.

‘But it would still be premature to judge that last week’s movement signals a fully fledged rebound of the dollar, because the rise seems to have been the result of active position-adjustment ahead of the long Easter holiday break,’ he said.

But John Noonan of Thomson/IFR Markets thinks last week’s price action in all of the asset markets was extraordinary, and could mean a sea change for the correlations that drive the forex market.

‘For months and months this would correlate with the Australian dollar, New Zealand dollar and Canadian dollar gaining at the expense of the yen, as investor enthusiasm would spill over to carry-trade demand,’ Noonan said.

‘Last week the Australian dollar, New Zealand dollar and Canadian dollar fell between 2 percent and 3 percent against the yen, suggesting that correlations are changing, and radically so,’ he said.

Wall Street staged a strong rally last week and the Dow Jones Industrial Average ended the week up around 3.5 percent.

The New York Mercantile Exchange’s benchmark oil futures contract dipped briefly below 100 US dollar per barrel level last week.

Tokyo 9.41 pm (0041 GMT)

US dollar

yen 99.77

sfr 1.0141

Euro

usd 1.5403

stg 0.7786

yen 153.68

sfr 1.5617

Sterling

usd 1.9780

yen 197.35

sfr 2.0058

Australian dollar

usd 0.8997

stg 0.4548

yen 89.76

yasuhiko.seki@thomson.com

yas/jm

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved.

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

Neither the Subscriber nor Thomson Financial News warrants the completeness or accuracy of the Service or the suitability of the Service as a trading aid and neither accepts any liability for losses howsoever incurred. The content on this site, including news, quotes, data and other information, is provided by Thomson Financial News and its third party content providers for your personal information only, and neither Thomson Financial News nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.

Sources: Forbes