|
Dollar in retreat, bonds sag
|
 |
March 15, 1999: 9:27 a.m. ET
Annual yen migration intensifies, spurring fears of BOJ intervention ahead
|
NEW YORK (CNNfn) - Global investors got a new burst of confidence in the Japanese economic outlook Monday, pushing the yen to a four-week high against the dollar and encouraging Treasury yields to edge higher.
By 9:00 a.m. ET, the dollar had slipped more than a full yen to 117.60 yen, its worst showing since Feb. 16, early in its recent upward course.
Traders attributed the retreat to the annual yen repatriation season, in which Japanese investors scramble to park their money in yen-denominated securities ahead of the Tokyo fiscal new year April 1.
The season traditionally spurs yen buying, depressing the dollar and other global currencies.
However, this year in particular has seen active official Japanese interest in a relatively strong dollar. A soaring yen tends to hurt the Japanese stock market by knocking overseas profits at the country's massive exporters like Hitachi (HIT) and Sony (SNE).
The dollar's downward recalcitrance has led to fresh speculation that the Bank of Japan may be forced to sell yen in order to keep currency markets locked in a comfortable range.
Traders estimate this range at between 115 and 120 yen to the dollar.
The flight to yen also pushed the euro down to month lows against the Japanese currency, but the European unit remained steady versus the dollar.
By 9:00 a.m. ET, the euro was stable at $1.0933, significantly firmer than its previous close of $1.09.
Lingering euphoria over the resignation of controversial German Finance Minister Oskar Lafontaine was giving the euro a much-needed lift, traders said, allowing the currency to put a brave face on next Thursday's Ifo survey of German business conditions.
The Ifo is a key indicator of the health of Europe's biggest economy. Economists expect the February figures to show that Germany's business climate is still falling.
Bonds don't enjoy silence
Meanwhile, the Treasury market reaped the bitter fruit of its recently reactive strategy as investors took "no news" to mean "bad news" and used the dollar's weakness as an excuse to trim their bond portfolios.
By 9:00 a.m. ET, the benchmark 30-year Treasury bond was down 8/32 of a point in price at 95-23/32, sending the yield up to 5.54 percent.
However, traders said activity was quiet in the face of the day's empty calendar of economic news, although the afternoon's weekly auction of short-term Treasury debt may provide technical interest.
The U.S. stock market may also galvanize deeper bond selling if the blue-chip Dow industrials crack the elusive 10,000 barrier. Traders noted that a firm rally on Wall Street would provoke many investors to reevaluate their asset allocation strategies, possibly levering even more funds out of the bond market and into stocks.
Instead, many key Treasury bond players were waiting on the sidelines for Tuesday, when Federal Reserve Chairman Alan Greenspan is set to talk about the agricultural sector.
Although Greenspan's comments are unlikely to have much direct bearing on interest rate policy, financial markets -- and the Treasury market in particular -- have attributed oracular significance to even the slightest of the Fed chief's public appearances. 
|
|
|
|
|
 |
|
