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Market Review - 16/12/2013 21:33GMT
Dollar mixed against other major rivals ahead of Fed’s meeting
Dollar traded mixed against other major currencies on Monday as market participants turned their attention to the Federal Reserve's upcoming policy meeting later in the week.
During the day, although the single currency moved sideways after rising to 1.3761 in Asian morning and then dropped briefly from 1.3762 to 1.3737 in European morning, the pair ratcheted higher after the upbeat euro zone data and rose to 1.3800 before retreating in New York morning on renewed dollar's broad-based rebound, dropped to 1.3743 in late New York.
The eurozone's composite output index rose to a three month high at 52.1 in November, indicating that European Central Bank policymakers will not need to step up stimulus measures. It was the fastest increase since April 2011, meanwhile, a separate report showed German's manufacturing index rose to a 30-month peak at 54.2.
Versus the Japanese yen, although dollar continued to move lower from last Friday's 5-year peak at 103.92 in Asia and dropped from 103.32 to 102.65, rebound in Nikkei futures lifted price in European trading and the pair later climbed back to 103.16 before moving around 103.00 level in New York session.
Cable moved sideways in tandem with euro in Asia before rising to 1.6335 in European morning, however, active cross-selling of sterling, especially versus the euro pressured price to 1.6290 before ratcheted higher to 1.6349 ahead of New York open. The pair later dropped again in New York morning on dollar's broad-based rebound and cabel fell to 1.6291 and then moved sideways later in the day.
The Federal Reserve Chairman Ben Bernanke, in prepared remarks to an event celebrating the Fed's centennial, said 'the U.S. central bank's legitimacy and independence relies on two-way communication with the public and The Federal Reserve must clearly explain its decisions to Americans and convince them that the policies are in their interest. Bernanke said 'without specifically discussing monetary policy or the U.S. economy.'
In other news, ECB's Draghi spoke at European parliament and said 'economy recovery is fragile; might experience long period of low inflation; money policy will remain accommodative for as long as needed; governing council ready and able to act, if needed; underlying price pressures are subdued; see modest growth in Q4; accommodative ECB money policy stance will support recovery; growth risk are on downside; governing council expects key ECB interest rates to remain at present or lower levels for extended period; monitor money market conditions closely, ready to consider all available instruments; we are fully aware of downward risk that protracted period of low inflation entails; see no risks of financial imbalances related to low interest rate environment; sovereign bonds will be treated risks-free in AQR, will be stressed in EBA stress tests; concerned that SRM decision making may become overly complex, financing arrangements may not be adequate; we are aware of complications of running a scheme akin to funding for lending; do not see deflation in euro zone.'
Data to be release on Tuesday:
Australia RBA minutes, Japan machine orders, U.K. CPI, PPI, RPI, Ons house price, EU Zew economic sentiment, CPI, Germany Zew economic sentiment, Zew current condition, U.S. CPI, current account, retail sales and NAHB housing market index.
Dollar mixed against other major rivals ahead of Fed’s meeting
Dollar traded mixed against other major currencies on Monday as market participants turned their attention to the Federal Reserve's upcoming policy meeting later in the week.
During the day, although the single currency moved sideways after rising to 1.3761 in Asian morning and then dropped briefly from 1.3762 to 1.3737 in European morning, the pair ratcheted higher after the upbeat euro zone data and rose to 1.3800 before retreating in New York morning on renewed dollar's broad-based rebound, dropped to 1.3743 in late New York.
The eurozone's composite output index rose to a three month high at 52.1 in November, indicating that European Central Bank policymakers will not need to step up stimulus measures. It was the fastest increase since April 2011, meanwhile, a separate report showed German's manufacturing index rose to a 30-month peak at 54.2.
Versus the Japanese yen, although dollar continued to move lower from last Friday's 5-year peak at 103.92 in Asia and dropped from 103.32 to 102.65, rebound in Nikkei futures lifted price in European trading and the pair later climbed back to 103.16 before moving around 103.00 level in New York session.
Cable moved sideways in tandem with euro in Asia before rising to 1.6335 in European morning, however, active cross-selling of sterling, especially versus the euro pressured price to 1.6290 before ratcheted higher to 1.6349 ahead of New York open. The pair later dropped again in New York morning on dollar's broad-based rebound and cabel fell to 1.6291 and then moved sideways later in the day.
The Federal Reserve Chairman Ben Bernanke, in prepared remarks to an event celebrating the Fed's centennial, said 'the U.S. central bank's legitimacy and independence relies on two-way communication with the public and The Federal Reserve must clearly explain its decisions to Americans and convince them that the policies are in their interest. Bernanke said 'without specifically discussing monetary policy or the U.S. economy.'
In other news, ECB's Draghi spoke at European parliament and said 'economy recovery is fragile; might experience long period of low inflation; money policy will remain accommodative for as long as needed; governing council ready and able to act, if needed; underlying price pressures are subdued; see modest growth in Q4; accommodative ECB money policy stance will support recovery; growth risk are on downside; governing council expects key ECB interest rates to remain at present or lower levels for extended period; monitor money market conditions closely, ready to consider all available instruments; we are fully aware of downward risk that protracted period of low inflation entails; see no risks of financial imbalances related to low interest rate environment; sovereign bonds will be treated risks-free in AQR, will be stressed in EBA stress tests; concerned that SRM decision making may become overly complex, financing arrangements may not be adequate; we are aware of complications of running a scheme akin to funding for lending; do not see deflation in euro zone.'
Data to be release on Tuesday:
Australia RBA minutes, Japan machine orders, U.K. CPI, PPI, RPI, Ons house price, EU Zew economic sentiment, CPI, Germany Zew economic sentiment, Zew current condition, U.S. CPI, current account, retail sales and NAHB housing market index.
