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Market Review - 22/05/2013 23:02GMT
Dollar rallies broadly on Bernanke's hawkish comments
The greenback surged against majority of its peers on Wednesday after Fed Chairman Ben Bernanke hinted at possibilities of the central bank slowing its bond purchases. Initially, dollar briefly dropped across the board after Bernanke said monetary stimulus is helping the U.S. economy recovery.
Fed's Bernanke testified on Capitol Hill and said 'U.S. monetary policy providing significant benefits, premature tightening would carry substantial risk; Fed will gradually reduce the flow of asset purchases if labor market improves in a real and sustainable way; Fed paying close attention to risk of financial instability; risks of financial instability does factor in to Fed thinking on the appropriate amount of monetary stimulus and exit strategy.'
Versus the Japanese yen, although the greenback rebounded to 102.65 at Asian open, price retreated to 102.35. However, dollar found renewed buying there and strengthened throughout European session after BoJ Governor Kuroda said he will maintain his loose monetary policy and rose to 103.18 at New York open. Despite brief pullback to 102.68 after Bernanke's initial comments, dollar rallied above last Friday's 103.32 high to a fresh 4-1/2 year high at 103.74 on dollar's broad-based strength.
Later, price pared intra-day gains and fell sharply to 102.73 in New York afternoon as minutes from the Fed's latest FOMC meeting showed policymakers were waiting for progress in labor market before altering the pace of their bond buying.
Although the single currency remained under pressure in Asia and retreated to 1.2904 at European open, price rose again in European morning and gained to 1.2959 in New York morning ahead of Bernanke's testimony in Congress. Despite a brief but sharp rise to an intra-day high at 1.2998 immediately after Bernanke's initial comments, euro swiftly pared intra-day gains and tanked after the chairman hinted at possibilities of the Fed slowing the pace of its bond purchases. Price eventually slumped to an session low of 1.2834 in New York afternoon.
The British pound remained under pressure in Asia and resumed recent decline to 1.5075 in European morning after a government report showed U.K. retail sales unexpectedly declined and as minutes of the Bank of England showed Governor Mervyn King was defeated for a fourth month in his bid to expand bond buying. Cable also rebounded swiftly to 1.5157 in New York morning before tumbling to a 7-week low at 1.5020 at New York midday before stabilising.
BoE minutes stated 'QE in May would have surprised markets, some members feared it could have created doubts about commitment to price stability; for others, case for more QE based on labour market slack, risk that euro zone weakness could push up sterling.'
U.K. April retail sales came in at -1.3% m/m 0.5% y/y versus forecasts of 0.0% n 2.0% respectively.
In other news, Fed's FOMC minutes stated ''many Fed participants felt continued labor market gains, more confidence in outlook, diminished risks needed b4 slowing bond buying; a number of participants expressed willingness to reduce pace of bond buying as early as June if economic growth strong, sustained; most participants emphasized importance of being prepared to adjust bond purchases up or down depending on incoming data.'
Data to be released on Thursday :
China HSCB flash manufacturing PMI, France manufacturing PMI, Germany manufacturing PMI, services PMI, EU manufacturing PMI, services PMI, UK retail sales, GDP, U.S. jobless claims, manufacturing PMI, house price index and new home sales.
Dollar rallies broadly on Bernanke's hawkish comments
The greenback surged against majority of its peers on Wednesday after Fed Chairman Ben Bernanke hinted at possibilities of the central bank slowing its bond purchases. Initially, dollar briefly dropped across the board after Bernanke said monetary stimulus is helping the U.S. economy recovery.
Fed's Bernanke testified on Capitol Hill and said 'U.S. monetary policy providing significant benefits, premature tightening would carry substantial risk; Fed will gradually reduce the flow of asset purchases if labor market improves in a real and sustainable way; Fed paying close attention to risk of financial instability; risks of financial instability does factor in to Fed thinking on the appropriate amount of monetary stimulus and exit strategy.'
Versus the Japanese yen, although the greenback rebounded to 102.65 at Asian open, price retreated to 102.35. However, dollar found renewed buying there and strengthened throughout European session after BoJ Governor Kuroda said he will maintain his loose monetary policy and rose to 103.18 at New York open. Despite brief pullback to 102.68 after Bernanke's initial comments, dollar rallied above last Friday's 103.32 high to a fresh 4-1/2 year high at 103.74 on dollar's broad-based strength.
Later, price pared intra-day gains and fell sharply to 102.73 in New York afternoon as minutes from the Fed's latest FOMC meeting showed policymakers were waiting for progress in labor market before altering the pace of their bond buying.
Although the single currency remained under pressure in Asia and retreated to 1.2904 at European open, price rose again in European morning and gained to 1.2959 in New York morning ahead of Bernanke's testimony in Congress. Despite a brief but sharp rise to an intra-day high at 1.2998 immediately after Bernanke's initial comments, euro swiftly pared intra-day gains and tanked after the chairman hinted at possibilities of the Fed slowing the pace of its bond purchases. Price eventually slumped to an session low of 1.2834 in New York afternoon.
The British pound remained under pressure in Asia and resumed recent decline to 1.5075 in European morning after a government report showed U.K. retail sales unexpectedly declined and as minutes of the Bank of England showed Governor Mervyn King was defeated for a fourth month in his bid to expand bond buying. Cable also rebounded swiftly to 1.5157 in New York morning before tumbling to a 7-week low at 1.5020 at New York midday before stabilising.
BoE minutes stated 'QE in May would have surprised markets, some members feared it could have created doubts about commitment to price stability; for others, case for more QE based on labour market slack, risk that euro zone weakness could push up sterling.'
U.K. April retail sales came in at -1.3% m/m 0.5% y/y versus forecasts of 0.0% n 2.0% respectively.
In other news, Fed's FOMC minutes stated ''many Fed participants felt continued labor market gains, more confidence in outlook, diminished risks needed b4 slowing bond buying; a number of participants expressed willingness to reduce pace of bond buying as early as June if economic growth strong, sustained; most participants emphasized importance of being prepared to adjust bond purchases up or down depending on incoming data.'
Data to be released on Thursday :
China HSCB flash manufacturing PMI, France manufacturing PMI, Germany manufacturing PMI, services PMI, EU manufacturing PMI, services PMI, UK retail sales, GDP, U.S. jobless claims, manufacturing PMI, house price index and new home sales.
