The dollar is weaker against the euro and the yen this morning as exporters across Asia convert dollar earnings into local currency. Dealers describe the selling as heavy but orderly. We are following the move and its effect on shipping and trade finance as the European session opens.
09:10 Euro holds its gains
EUR/USD is holding about 0.6% above yesterday's close as London trading picks up. Dealers at two Frankfurt banks say European corporate buyers of dollars, including importers paying for fuel and freight, are stepping in on the dip. "The exporters' selling is done for now," says Marta Kessler, a currency strategist at Rheinufer Bank in Frankfurt. "The question is whether Europe wants to sell more dollars on top."
08:45 Container lines slip
Shares in European container lines with dollar revenue opened lower. Nordhavn Lines is down 1.8%, Castellane Maritime 1.4%. Both report in euros and earn most of their freight in dollars, so a weaker dollar trims the value of their revenue when it is translated. For the shippers on the other side of that bill, see why your freight is still invoiced in dollars.
08:05 Trade-finance desks busy
Wei Ling Tan, head of trade finance at Straits Harbour Bank in Singapore, tells us conversion requests from shipping clients were about twice a normal morning's volume. "Owners who waited for a better rate have decided this is it," she says. Several charterers are also paying dollar hire early, before any rebound, and one asked to settle a whole quarter's hire in a single payment.
08:25 Freight index unmoved
The Break Freight Index is flat on the morning, at the level it closed yesterday. Freight is priced in dollars, so a weaker dollar makes the same box cheaper for buyers paying in euros or yen, but forwarders say no one has changed a rate sheet on one morning's move. "Currency moves reach freight contracts at the next tender, not the next hour," says Pieter Voskuil, a forwarder at Maasdelta Logistics in Rotterdam.
07:40 Yen at its firmest in weeks
USD/JPY has fallen more than one yen since the Tokyo open. Japanese exporters, including shipowners converting charter hire, were active sellers of dollars. The move reverses part of the weakness that has flattered owners' earnings this year, as we reported in Yen at the dock.
07:05 Seoul and Taipei sell dollars
Dealers in Seoul and Taipei report large dollar sales from shipbuilders and electronics exporters converting receipts. One dealer called it "the heaviest exporter flow since the spring". Local currencies are up between 0.4% and 0.7% against the dollar. Korean shipyards, which book most of their orders in dollars and pay their workforce in won, have been large sellers all week.
06:30 Dollar softer in Asian trade
The dollar opened on the back foot in Asia, slipping against most major currencies in thin early trading. There is no single headline behind the move. Dealers point to exporters converting accumulated dollar earnings at the end of the accounting period, a pattern that tends to be strongest in the first hours of the Asian session.
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