By Stanley White and Ron Harui
Sept. 24 (Bloomberg) -- The yen declined after the Federal Reserve announced it extended currency swap agreements and as Goldman Sachs Group Inc. said it will raise funds, giving investors confidence to buy higher-yielding assets.
The yen dropped the most this week against the dollar and euro as U.S. stock futures rose and Asian shares pared losses. Goldman Sachs secured a $5 billion stock investment from Warren Buffett's Berkshire Hathaway Inc. The Fed arranged $30 billion in swaps with central banks in Australia, Denmark, Norway and Sweden to ease short-term dollar funding. The Australian and New Zealand currencies weakened as prices for commodities declined.
``There's a case for the yen to weaken,'' said Motonari Ogawa, director of currency trading in Tokyo at Barclays Capital Inc., a unit of the U.K.'s third-biggest bank. ``People are focused on the stock market, so gains in Europe and the U.S. on Goldman's capital injection could calm nerves.''
The yen fell to 155.46 per euro at 7 a.m. in London from 154.63 late yesterday in New York. It was at 106.11 versus the dollar from 105.56. The euro bought $1.4652 from $1.4648. The British pound traded at $1.8517 from $1.8522. The yen may decline to 106.30 per dollar today, Ogawa said.
The Australian dollar fell to 83.60 U.S. cents from 84.40 cents late in Asia yesterday. New Zealand's dollar weakened 1.3 percent to 68.09 U.S. cents.
Gold, Australia's third most-valuable raw material export, fell $1.90 to $889.10 an ounce. Crude oil, its fourth most- valuable export, was little changed at $106.86 a barrel after falling for the first time in a week. Raw materials account for 60 percent of Australia's exports and sales of commodities such as lumber make up 70 percent of New Zealand's overseas shipments.
Stocks Futures
Standard & Poor's 500 Index futures expiring in December climbed 1.3 percent and Dow Jones Industrial Average futures added 1.1 percent. Japan's Nikkei 225 Stock Average was little changed, erasing an earlier decline of as much as 1.5 percent.
In so-called carry trades, investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the spread between the two. The risk is that currency market moves can erase those profits.
The Bank of Japan's benchmark rate of 0.5 percent compares with 4.25 percent in Europe and 2 percent in the U.S.
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.netRon Harui in Singapore at rharui@bloomberg.net
Last Updated: September 24, 2008 02:05 EDTDollar May Fall to Parity With Canadian Currency, Goldman Says
By Ron Harui
Sept. 24 (Bloomberg) -- The U.S. dollar may extend its decline to parity with the Canadian dollar, according to charts that predict price movements, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London.
Daily and weekly momentum indicators such as the stochastic oscillator and Goldman's ``Trend Strength'' charts are both ``bearish,'' Edgeley wrote in a research note yesterday. ``There is scope for further extension toward the potential trend line support from February around C$1.0000.''
The U.S. currency dropped to C$1.0346 as of 10:50 a.m. in Tokyo from C$1.0384 late in New York yesterday, when it touched C$1.0305, the lowest since Aug. 4. The greenback has weakened 1.1 percent versus Canada's dollar in the past month.
Support at C$1.0000 is on an ascending trend line that connects the lows of Feb. 28, May 21 and May 29, based on data compiled by Bloomberg. Support is a level where buy orders may be clustered. The C$1.0000 level was last traded on July 22.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Resistance is where sell orders may be clustered, while support is where there may be buy orders.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net
Last Updated: September 23, 2008 21:54 EDT
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