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Market Review - 30/07/2013 22:24GMT
Dollar ratchets higher ahead of Fed rate decision
The greenback edged higher against other currencies in a volatile manner on Tuesday as investors await the outcome of FOMC meeting, which began its 2-day meeting today. The Australian dollar tumbled in Asian session due to the dovish comments from RBA governor Stevens who said 'still has some scope to ease after inflation data.'
Versus the Japanese yen, although the greenback rose initially to 98.47 in Asia on short-covering, cross buying of yen versus other currencies pressured the pair to 97.76 in Europe. However, price staged a recovery after the release of S&P home price index and rose to 98.34 in New York morning despite the release of weaker-than-expected U.S. consumer confidence. Later, the pair retreated to 97.97 and then traded narrowly in U.S. afternoon.
U.S. S&P home price index came in at 0.1% m/m and 12.2% y/y, worse than the expectation of 1.5% and 12.4%. U.S. consumer confidence in July came in at 80.3, worse than the expectation of 81.4 and the revised reading of 82.1 in June.
Although the single currency rose strongly from 1.3248 in Asia on cross-buying of euro versus yen and climbed above last Friday's top at 1.3297 to 1.3302 in London midday, the pair retreated after the release of German CPI data and dropped in tandem with sterling to session low at 1.3235 in New York morning before staging a recovery to 1.3271.
German CPI in Jul came in at 0.5% m/m and 1.9% y/y, higher than the forecast of 0.3% and 1.7% respectively.
The British pound dropped initially to 1.5315 in Asia before staging a rebound to 1.5354 in European morning. However, price tumbled to 1.5295 and then penetrated last Thursday's low at 1.5264 to 1.5224 in New York afternoon due to the active cross selling of sterling versus euro (eur/gbp rallied from 0.8641 to 0.8707).
The Australian dollar nose-dived to 0.9053 in European morning due to the dovish comments from RBA governor Stevens and later dropped further to 0.9044 in New York morning. RBA governor Stevens said 'still has some scope to ease after inflation data; recent fall in the A$ makes economic sense, no surprise if it falls further; broadly appropriate that fiscal policy in consolidation mode; unemployment does appear to be trending up, within expectations.'
In other news, Greek Finance Minister Stournaras said 'Greece may not have a fiscal gap for 2015-16, easing autumn negotiations with lenders; Greece on track to meet 4.2% 2013 recession estimate; top priority for Greece is to have primary budget surplus this year, return to growth in 2014.' Spanish Prime Minister Rajoy said 'reforms starting to bear fruit in Spain; important to continue with reform program in Spain.' Portugal Prime Minister Coelho said 'we will not hesitate now on following through with bailout programme; country likely nearing economic turnaround.'
On the data front, eurozone economic sentiment in July came in at 92.5, slightly worse than the expectation of 92.6. Eurozone business climate in July was released at -0.53, better than the forecast of -0.55.
Data to be released on Wednesday:
New Zealand business confidence, Japan manufacturing PMI, housing starts, construction orders, U.K. BRC shop price index Swiss UBS consumption indicator, KOF leading indicator, German retail sales, unemployment change, unemployment rate, France PPI, Italy PPI, CPI, HCIP, unemployment rate, EU CPI, unemployment rate, U.S. ADP employment, GDP, personal consumption, PCE core, Chicago PMI, FOMC rate decision, Canada GDP.
Dollar ratchets higher ahead of Fed rate decision
The greenback edged higher against other currencies in a volatile manner on Tuesday as investors await the outcome of FOMC meeting, which began its 2-day meeting today. The Australian dollar tumbled in Asian session due to the dovish comments from RBA governor Stevens who said 'still has some scope to ease after inflation data.'
Versus the Japanese yen, although the greenback rose initially to 98.47 in Asia on short-covering, cross buying of yen versus other currencies pressured the pair to 97.76 in Europe. However, price staged a recovery after the release of S&P home price index and rose to 98.34 in New York morning despite the release of weaker-than-expected U.S. consumer confidence. Later, the pair retreated to 97.97 and then traded narrowly in U.S. afternoon.
U.S. S&P home price index came in at 0.1% m/m and 12.2% y/y, worse than the expectation of 1.5% and 12.4%. U.S. consumer confidence in July came in at 80.3, worse than the expectation of 81.4 and the revised reading of 82.1 in June.
Although the single currency rose strongly from 1.3248 in Asia on cross-buying of euro versus yen and climbed above last Friday's top at 1.3297 to 1.3302 in London midday, the pair retreated after the release of German CPI data and dropped in tandem with sterling to session low at 1.3235 in New York morning before staging a recovery to 1.3271.
German CPI in Jul came in at 0.5% m/m and 1.9% y/y, higher than the forecast of 0.3% and 1.7% respectively.
The British pound dropped initially to 1.5315 in Asia before staging a rebound to 1.5354 in European morning. However, price tumbled to 1.5295 and then penetrated last Thursday's low at 1.5264 to 1.5224 in New York afternoon due to the active cross selling of sterling versus euro (eur/gbp rallied from 0.8641 to 0.8707).
The Australian dollar nose-dived to 0.9053 in European morning due to the dovish comments from RBA governor Stevens and later dropped further to 0.9044 in New York morning. RBA governor Stevens said 'still has some scope to ease after inflation data; recent fall in the A$ makes economic sense, no surprise if it falls further; broadly appropriate that fiscal policy in consolidation mode; unemployment does appear to be trending up, within expectations.'
In other news, Greek Finance Minister Stournaras said 'Greece may not have a fiscal gap for 2015-16, easing autumn negotiations with lenders; Greece on track to meet 4.2% 2013 recession estimate; top priority for Greece is to have primary budget surplus this year, return to growth in 2014.' Spanish Prime Minister Rajoy said 'reforms starting to bear fruit in Spain; important to continue with reform program in Spain.' Portugal Prime Minister Coelho said 'we will not hesitate now on following through with bailout programme; country likely nearing economic turnaround.'
On the data front, eurozone economic sentiment in July came in at 92.5, slightly worse than the expectation of 92.6. Eurozone business climate in July was released at -0.53, better than the forecast of -0.55.
Data to be released on Wednesday:
New Zealand business confidence, Japan manufacturing PMI, housing starts, construction orders, U.K. BRC shop price index Swiss UBS consumption indicator, KOF leading indicator, German retail sales, unemployment change, unemployment rate, France PPI, Italy PPI, CPI, HCIP, unemployment rate, EU CPI, unemployment rate, U.S. ADP employment, GDP, personal consumption, PCE core, Chicago PMI, FOMC rate decision, Canada GDP.
