Forex Analysis

By Leah Schnurr NEW YORK (Reuters) - Wall Street was set for a lower open on Tuesday, the day after hitting a five-month high, pressured by a stronger dollar and lackluster corporate results. Texas Instruments Inc <TXN.N> fell in premarket trade after it warned that fourth-quarter revenue will be hurt by slowing demand, while United States Steel Corp <X.N> tumbled after posting a loss and warning of a fourth-quarter deficit due to the uncertain economy in North America and Europe. Texas Instruments slipped 1.5 percent to $28.55, while U.S. Steel slumped 5.8 percent to $39.80. Equities continued to take their cue from the U.S. dollar, which steadied with investors wary of pushing it lower. The dollar index <.DXY> was up 0.6 percent. Stocks and the greenback have formed an inverse relationship, exacerbated by expectations the Federal Reserve will embark on another round of economic stimulus. Rick Meckler, president of investment firm LibertyView Capital Management in New York, noted the dollar-equities relationship could start to unravel if...

By Jessica Mortimer LONDON, Oct 26 (Reuters) - The dollar gained against the yen, holding above its 1995 record low on Tuesday following reminders from Japanese officials about the possibility of more steps to curb yen strength. The U.S. currency steadied against other currencies, with the euro stuck below $1.40 as market participants pondered how much monetary easing the Federal Reserve would opt for and how much may be priced in to an already weak U.S. currency. Helping steady the dollar were comments by New York Fed President William Dudley overnight, who said the economic context would determine whether an incremental or big bang approach to asset purchases was better. The market was also wary about pushing the dollar lower versus the yen due to worries about possible intervention after Japanese Finance Minister Yoshihiko Noda said Japan would take decisive steps on forex when needed.  At 0746 GMT, the dollar was up 0.5 percent at 81.15 yen JPY= , with traders citing talk of Japanese investors...

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...

* Sanctions for rule-breakers would not be automatic * But crisis mechanism would admit possibility of default * Bond spreads would therefore pressure governments * Unclear if EU treaty can be revised By Jan Strupczewski BRUSSELS, Oct 26 (Reuters) - Reforms to European Union budget rules are being criticised for giving politicians too much leeway in enforcing the rules. But a German proposal means bond markets may ultimately become the main enforcer, imposing the toughest discipline that countries have seen so far. Under draft reforms agreed by EU finance ministers last week, punitive sanctions on states that spent too freely would not be automatic; any decision by ministers to move forward with sanctions could be halted by a blocking minority.  Germany, which had been advocating near-automatic sanctions, yielded to French demands for more political discretion in the process. As a result, the reforms were roundly criticised by some northern European governments and by the European Central Bank for being too soft.  But in exchange for its concession, Germany...

Oct 24 (Reuters) - The Group of 20 major economies vowed to avoid competitive currency devaluations and shifted more power to emerging economies at the IMF, taking steps that analysts viewed as important for averting trade wars and promoting flexible exchange rates. Following is a summary of reserves reports issued by analysts about the G20 communique and outcomes following the gathering of finance ministers and central bankers.  --------------------------------------------------------- THOMAS STOLPER, CHIEF CURRENCY STRATEGIST, GOLDMAN SACHS, LONDON "The outcome of the G20 meeting clearly shows progress in the global rebalancing policy debate. In particular the FX relevant sections have become a lot more prominent and all the key issues have found some mention, including current account positions, protectionism, capital controls and exchange rate flexibility. "At the same time, this is not a Plaza-style statement that signals a broad agreement on the role currencies have to play in the global rebalancing. Just taking the first sentence of the FX bullet, the language is not tight enough to...

  The NZD/USD moved higher as kiwi advanced against its USD counterpart and other major currencies which traded near of a one-month high. The move comes ahead of reports this week forecast to show U.S. factory orders rose for a fourth-straight month and Chinese manufacturing expanded at a quicker pace, support the general positive sentiment in the market. Projection noted that the pair will decline, as the market is still focused on the US fundamental data that are expected to confirm the ongoing recovery in the world's largest economy. Nonetheless, the dollar is still far from reflecting its strong fundamentals as investors are lured towards risk more than the dollar, especially as the Feds did not provide a clear signal for the soon shift in status. On Thursday, the New Zealand economy will release the NBNZ Business Confidence Report at 02:00 GMT that may affect on the pair. On Thursday, the world's largest economy will release the weekly jobless claims at 12:30 GMT and...

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