Dollar rises vs yen, cheered by Wells Fargo outlook

NEW YORK - The dollar rose against the yen on Thursday, as global stocks gained after positive U.S. earnings news, rekindling appetite for so-called riskier assets such as stocks ahead of the Easter holidays.

By (Reuters)

Published: Thu 9 Apr 2009, 8:47 PM

Last updated: Thu 2 Apr 2015, 3:30 AM

Wells Fargo delivered an upbeat earnings outlook for the first quarter, adding to optimism about the health of the U.S. financial sector and prompting investors to unwind trades financed by the yen’s low rates.

“Some of the U.S. companies that reported did a little better than expectations” and that has caused a rise in the dollar versus the yen,” said Brian Kim, currency strategist, at UBS in Stamford, Connecticut.

“But it’s too early to say whether bad earnings have been priced in completely. Financials are going to be the bellwether of the market and I’m not sure if this is risk aplite coming back because we still have a lot of financial sector concerns.”

In early New York trading, the euro was little changed against the dollar at $1.3256, having climbed as high as $1.3335 earlier.

The euro was supported by a rise in regional share prices, although the currency retreated from a session high after a European Central Bank Governing Council member said a fall below 1 percent in the central bank’s key rate was “open for discussion”.

Against the yen, the euro was up 0.9 percent at 133.37 yen The dollar rose 0.7 percent versus the yen at 100.39.

Sterling was up slightly at $1.4715 after the Bank of England held interest rates at a record low 0.5 percent, as widely expected, and said it would continue with quantitative easing.

The Australian dollar rose to US$0.7171, up 1.1 percent, another indication of higher risk appetite.

“To the extent that we’ve seen a slight revival in risk appetite, the rebound in equities is important,” said Robert Minikin, senior forex strategist at Standard Chartered in London.

“But we stress that for many currencies, for example in dollar/yen, it’s been a mean-reverting move, rather than pushing out to new levels.”

Better-than-expected U.S. data on Thursday also contributed to improved market sentiment. The number of U.S. workers filing new claims for jobless benefits fell more than expected, while the U.S. trade deficit shrank 28.3 percent in February.

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