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Improving risk sentiment knocks
yen
Simon Falush
Reuters
Friday November 30, 2007
The yen fell broadly on Friday and high-yielders
gained after comments by Federal Reserve Chairman Ben Bernanke
cemented expectations of easier monetary policy, which may help
the U.S. economy to avoid a recession.
The prospect of interest rate cuts eased concerns about a slowdown
in global growth, boosting the high-yielding currencies of Australia
and New Zealand and also giving some support to the U.S. dollar.
Reports that the U.S. government and financial institutions are
discussing a plan to renegotiate adjustable rate mortgages also
helped sentiment. They suggested that moves are afoot to clean
up the subprime mortgage mess that has rocked global financial
markets.
In remarks to the Charlotte Chamber of Commerce on Thursday,
Fed chief Bernanke said a resurgence in financial strains in recent
weeks had dimmed the outlook for the U.S. economy, signaling an
openness to lower rates again.
(Article continues below)
These added to comments from Fed Vice Chairman Donald Kohn on
Wednesday -- that renewed financial market turmoil could slow
the U.S. economy more abruptly than thought -- boosting expectations
of a Fed rate cut next month, with more to come in 2008.
The prospect of lower rates lifted sentiment in equity markets
with shares in the U.S., Asia and Europe all rallying leading
investors to sell the yen in favor of higher yielding, riskier
assets.
"There is a tight link between how the equity market is
performing and how the yen tends to do," said Phyllis Papadavid,
currency strategist at Societe Generale.
"Now that risk appetite seems to have stabilized, it's unsurprising
that high yielders are doing better and the yen is down."
Full
article here.
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INFOWARS:
BECAUSE THERE'S A WAR ON FOR YOUR MIND
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