RPT-GLOBAL MARKETS-Dollar drops, commodities jump on G20 steps

* G20 language on “market determined” FX rates keeps USD
down

* Bullish commodities trend still in place

* Asia stocks climb after declining last week

* ASX shares leap 19 pct on $8 bln bid from Singapore’s SGX

* Just how much will the Fed’s QE2 be?
(Repeats to include additional subscribers)

By Kevin Plumberg

HONG KONG, Oct 25 (BestGrowthStock) – The dollar dropped 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 copper.

Major European stock markets were up shortly after opening
with the FTSEurofirst 300 (.FTEU3: ) index 0.40 percent higher.

While the G20 meeting did not reach a consensus on details
such as numerical targets for a country’s economic imbalances,
the group found common ground on the need for more “market
determined” 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 2-3 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.
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For more on the G20 meeting and its implications, click
[ID:nTOE69K01G]

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
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The U.S. dollar slid to a 15-year low against the yen of
80.65 yen (JPY=: ), with some dealers confident the Bank of Japan
would not intervene to weaken its currency so soon after a G20
meeting promoting flexible exchange rates.

The euro rose 0.8 percent to $1.4058 (EUR=: ), having risen
9.6 percent since September. A convincing move above $1.4050
means the market will next want to target the 9-month high
reached last Friday, at $1.4160.

Investors were essentially again betting 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. [ID:nN22200900]

POST-G20 MARKET LIFTS ASIA FX

After the G20, dealers were keen also to 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 region has been a magnet for capital flows and will
probably continue to see these flows of money push up domestic
currencies.

“The sharp drop in U.S. yields alongside robust Asian
fundamentals is fuelling large equity, fixed income and
speculative currency inflows into Asian economies. The prospect
of the Fed embarking on Fed QE2 in November suggests these FX
flows are unlikely to reverse meaningfully any time soon,”
Credit Suisse currency strategists said in a note.

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 1.8 percent (.MIAPJ0000PUS: ) after ending last week down
1.2 percent.

Shares of Australia’s ASX (ASX.AX: ) popped 19 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. [ID:nSGE69N02J]

Japan’s Nikkei share average was the odd man out, slipping
0.3 percent (.N225: ) on cautiousness about how the yen’s
strength would impact corporate results ahead of the earnings
season.

Japanese exports slowed for a seventh consecutive month in
September, stung by yen strength and slowing overseas demand.
[ID:nTOE69O008]

Metals were early winners after the G20 meeting. Gold rose
1.4 percent to $1,345.60 an ounce (XAU=: ), creeping closer to
its all-time high at $1,387.10 an ounce.

Copper traded on the London Metal Exchange jumped more than
2 percent to $8,549.00 a tonne (CMCU3: ), a two-year high,
clearing the way for a try at triangle pattern resistance at
$8,640.

Crude for December delivery climbed 1.2 percent to $82.65 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)

RPT-GLOBAL MARKETS-Dollar drops, commodities jump on G20 steps