FOREX-Dollar gains against euro on Deutsche Bank fears, falls vs Mexican peso

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NEW YORK The U.S. dollar rose against the euro on Tuesday after concerns surrounding Deutsche Bank caused general unease over Europe’s banking sector, while the Mexican peso rallied on short-covering after the first U.S. presidential debate.

Deutsche Bank (DBKGn.DE) shares hit a record low on Tuesday a day after Germany’s biggest lender said it had no need for German government help with a $14 billion U.S. demand to settle claims it missold mortgage-backed securities.

The euro was last down 0.29 percent at $1.1220, easing from an 11-day high of $1.1278 touched on Monday.

Concerns that capital levels at European banks in general need to be strengthened contributed to the euro’s weakness, said Marvin Loh, senior global markets strategist at BNY Mellon in Boston.

The perception among market participants that Democratic presidential candidate Hillary Clinton’s performance in the first U.S. presidential debate was superior to that of Republican candidate Donald Trump boosted the peso MXN=.

The currency had touched a record low of 19.92 pesos against the dollar on Monday on concerns that a Trump victory would threaten Mexico’s exports to the United States, its single biggest market.

The outcome of the debate led investors to cover peso short positions, said Richard Franulovich, senior currency strategist at Westpac Banking Corporation in New York.

Data from the U.S. Commodity Futures Trading Commission on Friday showed speculators had recently ramped up their bearish bets against the Mexican currency.

The dollar was last down 2.2 percent against the peso at 19.4310 pesos after hitting an 11-day low of 19.4048 pesos in early trading. The dollar was on track for its biggest daily percentage drop against the peso since mid-February.

Relief that Clinton’s performance was viewed as superior also likely helped the dollar gain against the euro given uncertainty surrounding a potential Trump presidency, Franulovich of Westpac said.

Markets have tended to see Clinton as the candidate of the status quo, while few are sure what a Trump presidency might mean for U.S. foreign policy, international trade deals or the domestic economy.

“You might argue that currencies like the yen and the euro had a defensive quality about them that were benefiting from Trump risk,” he said.

The dollar was last flat against the yen at 100.32 yen JPY= after falling 0.7 percent against the Japanese currency on Monday. The dollar index .DXY, which measures the greenback against a basket of six major currencies, was last up 0.15 percent at 95.443.

ALGIERS Iran rejected on Tuesday an offer from Saudi Arabia to limit its oil output in exchange for Riyadh cutting supply, dashing market hopes the two major OPEC producers would find a compromise this week to help ease a global glut of crude.

WASHINGTON The Federal Reserve should avoid raising interest rates too much, Fed Vice Chairman Stanley Fischer said on Tuesday, adding that gains in U.S. incomes are a sign that workers are benefiting from a tighter labor market.

NEW YORK U.S. single-family home prices rose slightly less than expected on an annual basis in July, and the year-over-year gain was smaller than in the prior month, a survey showed on Tuesday. Thanks.

UPDATE 1-Two unions join chorus against Canadian Pacific’s Norfolk Southern bid

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CHICAGO Two trade unions representing workers at No. 4 U.S. railroad Norfolk Southern Corp (NSC.N) have joined a growing chorus of opposition to an unsolicited bid from Canadian Pacific Railway Ltd (CP.TO), one in an unpublished letter sent to the U.S. rail regulator and the other in an interview with Reuters.

The moves add to a growing list of opponents to any deal, which includes customers of Norfolk Southern and a number of elected U.S. officials.

In a Jan. 7 letter to the Surface Transportation Board that has not yet been made public but was viewed by Reuters, Transportation Communications Union/International Association of Machinists President Robert Scardelletti urged the rejection of any proposed merger.

“CP’s proposed merger would result in massive job reductions of United States rail workers,” Scardelletti wrote. “If such a merger is approved, it undoubtedly would lead to further consolidation of the remaining U.S. carriers, with attendant job loss throughout every railroad craft.”

The TCU/IAM letter comes a few days after Reuters reported on a series of letters from Norfolk Southern customers to the STB opposing any merger.

Norfolk Southern declined to comment. A Canadian Pacific spokesman said this was evidence that Norfolk Southern “continues to mislead all stakeholders” while refusing to meet to discuss “the merits of this transformational opportunity.”

The Canadian company in mid-November disclosed its $28 billion offer to buy Norfolk Southern.

Opponents fear any deal could trigger a wave of mergers that would leave North America with an anticompetitive rail duopoly and that Canadian Pacific would squeeze profit out of Norfolk Southern by cutting back on necessary investments.

It would be the first merger involving a U.S. railroad since the STB rewrote rules in 2001 after a flurry of consolidation reduced the number of major North American railroads to seven from 35.

The proposed merger is expected by analysts to face a tough review.

A number of elected officials including two senior U.S. House Democrats have come out against any deal.

Separately, John Risch, the national legislative director for the transportation division of the SMART Union, said his labor organization was “very concerned” that Canadian Pacific would strip Norfolk Southern of workers and necessary investments.

“You don’t merge two railroads like this to create job opportunities but to boost profits for a few investors,” he told Reuters in an interview.

Risch said SMART “will very likely” voice concerns directly to the STB in the near future. Good Luck.

FOREX-Dollar gains over 9 pct against basket of major rivals in 2015

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NEW YORK The dollar ended 2015 with a more than 9 percent annual gain against a basket of currencies on Thursday, despite falling in December, with portfolio rebalancing from asset managers leading the currency higher in thin trading.

Riding a rally dating to May 2014, the greenback has appreciated by a quarter in value against a basket of currencies and by 22 percent against the euro. For the year, the greenback rose over 10 percent against the euro for its second straight yearly gain.

On Thursday, the euro hit a more than one-week low against the dollar of $1.08530, with analysts attributing the move to purchases of dollar-denominated assets from money managers moving to meet minimum exposure requirements.

“Portfolio rebalancing absolutely has something to do with the dollar’s strength,” said Sireen Harajli, currency strategist at Mizuho Bank Ltd in New York, referring to Thursday’s gains.

The dollar index, which measures the greenback against a basket of six major rivals, hit a more than one-week high of 98.750. For the month, it fell 1.5 percent, its first decline in four months.

Against the yen, the dollar hit a more than two-month low of 120.005 yen. Analysts said weaker-than-expected U.S. Chicago Purchasing Managers’ Index data boosted the safe-haven Japanese currency. For the year, the dollar eked out a 0.4 percent gain to mark its fourth straight yearly rise against the yen.

The dollar has advanced this year on views that the Federal Reserve’s start to its cycle of interest rate increases, combined with steadily loose monetary policy from the European Central Bank and the Bank of Japan, would continue to bolster the greenback.

The Fed increased rates for the first time in nearly a decade earlier this month and projections from Fed policymakers indicated that they expect four more increases next year.

Analysts said that divergence in monetary policy would remain a theme at least into the first quarter of 2016.

“The Fed could come back with a second hike in March, which is not fully priced in, and the dollar should draw fresh support from that,” said Richard Franulovich, senior currency strategist at Westpac in New York.

The dollar was last up 1.3 percent against the Swiss franc at 1.00150 franc after hitting a more than three-week high of 1.00240 franc.

The dollar rose 0.7 percent against the franc for the year to mark its second straight yearly gain. Thanks.

FOREX-Dollar falls against major currencies after Fed rate hike

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NEW YORK The U.S. dollar fell against a basket of major currencies in the wake of the Federal Reserve’s first benchmark interest rate hike in nearly a decade, erasing gains made immediately after the decision.

The U.S. central bank’s policy-setting committee raised the range of its benchmark rate by a quarter percentage point to between 0.25 and 0.50 percent, ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.

The Fed made clear this was a tentative start to a “gradual” tightening cycle and that in deciding its next move it would put a premium on monitoring inflation, which is mired below target.

The median projected target interest rate for 2016 remained 1.375 percent, implying four quarter-point rate hikes next year. In a news conference following the Fed statement, Fed Chair Janet Yellen said the U.S. economy had held up and grown at a solid pace.

The dollar index, which hit a more than one-week high of 98.558 after the Fed rate decision, was last down 0.43 percent at 97.806 .DXY.

While the implied pace of four quarter-point increases in 2016 should have led the dollar higher, the Fed’s verbal cues that it would follow a gradual pace of hikes weighed on the greenback against the euro, said Jason Leinwand, managing director at derivatives advisory firm Riverside Risk Advisors in New York.

“Some of the comments in the statement were very clear that they’re not going to be raising on a regular basis,” Leinwand said.

The euro was last up 0.47 percent against the dollar at $1.09850 EUR=EBS after hitting a session low of $1.08880 immediately after the Fed decision.

The dollar was last mostly flat against the yen at 121.600 yen JPY=EBS after hitting a one-week high against the Japanese currency of 122.300 immediately after the Fed decision.

The dollar was last down 0.8 percent against the Swiss franc at 0.98350 franc CHF=EBS.

(Editing by Meredith Mazzilli and James Dalgleish) Take Care.