Forex Pairs

By David Fox HONG KONG, Oct 26 (Reuters) - Asian stocks hovered near a 28-month high on Tuesday and the dollar steadied after a steep decline, with debate about the outcome of the next Federal Reserve meeting clouding the near-term outlook. Major European stock markets opened a touch weaker, with the FTSEurofirst 300 .FTEU3 index down 0.1 percent. After no major policy initiatives emerged from a Group of 20 finance ministers meeting over the weekend, investors had kept selling the dollar on expectations that further asset-buying from the Fed will lead to debasement of the U.S. currency. Fed officials, however, have not been uniform in their comments about "QE2", leading to some doubts in markets about how big such a programme will be. Kansas City Fed President Thomas Hoenig even called more asset buys by the central bank a "very dangerous gamble".  Expectations of more cheap money flooding the financial system have been pushing up global equity and commodity prices, which briefly hit a 27-month...

Oct 26 - (IFR) - USD/KRW traded a tight 1115.3-1122.8 range in Asia on Monday; last at 1116.3. The pair fell sharply just after the open in response to the change in language in the G20 communique (to market determined from market oriented exchange rates) plus a Goldman's note suggest that the Fed may need to do $4trln if the economy goes really bad. Traders in Asia say the BOK intervened below 1117 despite the G20 communique (reportedly to the tune of $500-600mln). The Kospi closed up 1.0%. Overnight the implieds traded an 1116/1120 range on moderate volume before closing in NY at 1119.5/1120.5. We look like getting a reality check today in terms of QE2. Fed member Dudley comments already this morning has seen EUR/USD dip 30 pips as the market pulls back on QE2 expectations. The EUR/USD move should not impact USD/KRW but it will. 

Once again, mixed trading and jittery sentiment marks the European session, and undoubtedly the royal currency is the dominant victor in the equation. Investors are still wary over the prospects for further quantitative easing and monetary easing to stimulating waning growth. The outlook for the global economy remains the cornerstone for investors and the market is fluctuating today following downbeat earnings from Europe, which weighed negatively on equities and on the overall risk appetite. Nonetheless, amid the dark cloud smothering the market, rays of light did shine in UK skies and sterling emerged strongly after the better than expected data. UK reported 0.8% expansion in the third quarter, double the pace expected which casted further doubt and confusion over investors amid their debate over possibilities for APF expansion next week. Arch MPC dove Adam Posen argued for the APF increase to £250 billion citing the weak economic outlook and downside pressures on the recovery which will keep inflationary pressures in place. Yet, the...

Oct 26 - (IFR) - USD/SGD traded a 1.2910-1.2995 range in Asia on Monday; last at 1.2915. It was a whippy session but after a stuttering start the downside was back in play on the back of the change in the G20 communique and a Goldman's note talking big numbers required for QE. The Straits Times closed up a very modest 0.3% with the bourse weighed down by the SGX takeover offer for Australia's ASX (A$8.4bln). Sep CPI +3.7%yoy vs expected 3.6%yoy. Overnight USD/SGD made a minor new low at 1.2905 before moving into a sideways consolidation phase eventually closing in NY at 1.2930 after Wall Street gave back most of its opening gains. This morning has traded up to 1.2944 on Euro weakness following Fed member Dudley comments. Peter.Whitley@thomsonreuters.com

The main moving sentiment in the market this week is the weekend G20 meeting and the new pledges from member nations which all sided to the disadvantage of the dollar. The Group of 20 finance leaders in South Korea pledged to avoid intervening in the market to weaken their currencies to gain trade advantages, which gave the dollar the bearish bias on expectations in the market that nations will refrain from unilaterally selling their currencies versus the dollar at least into next month when the nations’ leaders meet. This sentiment worked against the dollar and weakened it further adding to the quantitative easing prospects and weakening recovery outlook. The pledges rather calmed markets and eased the jitters seen recently over prospects for a new round of currency wars, and adding to that it supported expectations for China to move faster on the yuan revaluation which will also be good support for global trade and the recovery. The dollar was moving bearishly since this...