* G20 language on "market oriented" FX rates keeps USD down
* Bullish commodities trend still in place
* Asia stocks edge up after declining last week
* Just how much will the Fed's QE2 be?
By Kevin Plumberg
HONG KONG, Oct 25 (Reuters) - The dollar fell broadly on
Monday after a Group of 20 meeting produced enough agreement
despite discordant policies to keep the status quo on the trade
of selling the U.S. currency and buying stocks and commodities
such as gold.
While the international meeting did not reach a consensus
on details such as numerical targets for a country's economic
imbalances, the G20 found common ground on the need for more
"market oriented" exchange rates and concluded with a shift in
power to developing economies in the International Monetary
Fund -- enough to avert an all-out currency war, for now.
"It looks like the market has taken the G20 as a green
light to continue with the trends up to that point, which have
been towards U.S. dollar weakness," said Sue Trinh, senior FX
strategist at Royal Bank of Canada in Hong Kong.
Investor focus will probably shift to a Federal Reserve
policy meeting on Nov 1-2 that could result in the central bank
printing money to buy assets, although estimates of how big the
program will be varied widely.
Dealers will parse a speech by Fed Chairman Ben Bernanke at
1230 GMT for indications whether he is leaning toward
aggressive quantitative easing or a moderate approach.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For more on the G20 meeting and its implications, click
[]
For a FACTBOX on what the G20 accomplished, click
[]
For a PDF on global currency tensions, click
http://r.reuters.com/gez77p
For a graphic on Japan's exports by destination
http://r.reuters.com/hew89p
For a graphic on Japan's export growth
http://r.reuters.com/new89p
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The U.S. dollar index, a gauge of its performance against a
trade-weighted basket of currencies, fell 0.3 percent <=USD> to
76.99 after two straight days of gains.
Significant support for the index lies at 76.00, a move
below which would likely accelerate selling of the U.S.
currency.
Investors were essentially putting back on bets against the
dollar after the G20 meeting reduced some risks of a goods
trade backlash from conflicting currency policies.
Short-term investors on the International Monetary Market
had a collective bet against the dollar worth $25.8 billion for
the week ended Oct. 19, down from about $30 billion two weeks
prior. []
POST-G20 MARKET LIFTS ASIA FX
After the G20, dealers were keen to also add to their bets
on additional strength in emerging Asian currencies, which many
policymakers believe have to be allowed to rise as part of a
recipe for fixing global economic imbalances.
The dollar fell 0.9 percent <KRW=> against the South Korean
won. The won's broad trade-weighted exchange rate is roughly 13
percent below its 10-year average, Bank for International
Settlements data showed, partially the result of repeated
intervention by the Bank of Korea.
Buying of Asia ex-Japan equities was spread out across
sectors, though financials, energy and commodities outperformed
slightly. The MSCI index of Asia Pacific stocks outside Japan
was up 1.6 percent <.MIAPJ0000PUS> after ending last week down
1.2 percent.
Shares of Australia's ASX <ASX.AX> popped 20 percent higher
after Singapore Exchange <SGXL.SI> said it wanted to buy Asia's
third-largest exchange for $8.3 billion. The deal would create
the fifth-largest exchange in the world. []
Japan's Nikkei share average was the odd man out, slipping
0.3 percent <> on cautiousness about how the yen's
persistent strength would impact corporate results ahead of the
earnings season.
"The G20 meeting agreed to refrain from competitive
currency devaluations, and that had sparked expectations that
extreme strength in the yen would be avoided," said Yumi
Nishimura, deputy general manager at Daiwa Securities Capital
Markets in Tokyo.
"But now the market seems to be returning to a bias toward
weakness in the dollar, eyeing a possible further easing by the
Federal Reserve next month, and that's weighing on stocks."
Japanese exports slowed for a seventh consecutive month in
September, stung by yen strength and slowing overseas demand.
[]
Metals were early winners after the G20 meeting. Gold rose
0.7 percent to $1,336.45 an ounce <XAU=>, creeping closer to
its all-time high at $1,387.10 an ounce.
Copper traded on the London Metal Exchange jumped 1.5
percent to $8,457.75 a tonne <CMCU3>, closing in on a two-year
high hit of $8,492.00 last Tuesday. A rise above the two-year
high would clear the way for a try at triangle pattern
resistance at $8,640.
Crude for December delivery climbed 1 percent to $82.47 a
barrel <CLc1>, extending a 12 percent rise since September,
when expectations spread for the Fed to inject copious amounts
of cheap money into the financial system.
(Additional reporting by Masayuki Kitano, Charlotte Cooper and
Aiko Hayashi in TOKYO, Reuters Market Analyst Wang Tao in
SINGAPORE and Reuters FX Analyst Krishna Kumar in SYDNEY;
Editing by David Fox)
