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Market Review - 07/11/2013 22:17GMT
Euro tumbles after ECB 0.25% rate cut
The single currency tumbled on Thursday after ECB unexpectedly cut interest rate to 0.25% together with the release of U.S. GDP data which came in stronger than economist's forecast. ECB cut refinancing rate to 0.25% and cut interest rate on marginal lending to 0.75%. U.S. GDP in Q3 came in at 2.8%, stronger than the forecast of 2.0%.
The single currency traded narrowly in Asian session and European morning. Euro tumbled to 1.3354 after ECB announced the interest rate decision and then fell to an intra-day low of 1.3295 in New York morning due to the release of strong U.S. GDP data. The pair later rebounded to 1.3450 in late New York as Dow Jones index turned negative and closed down by 153 points at 15594.
Versus Japanese yen, the greenback found support at 98.56 in Asian trading and then climbed higher to 98.75 in European morning. Dollar further jumped to a session high at 99.41 after the release of stronger-than-expected U.S. GDP data in New York morning. However, profit-taking offers together with active cross buying in jpy quickly emerged there and U.S. dollar tanked to intra-day low at 97.60 in late NY due to the sharp selloff in U.S. equities.
The British pound fell to 1.6065 in Asian session before rebounding to 1.6092 ahead of European open. The pair dropped to 1.6054 ahead of New York open after Bank of England rate decision and then further tanked to a session low at 1.6010 in tandem with euro's selloff and strong U.S. GDP data in New York morning. However, renewed buying interest there lifted price higher to 1.6114 in late New York b4 stabilizing.
Bank of England said 'leaves QE asset purchase total unchanged at 375 billion sterling; holds bank rate at 0.5%.'
ECB's President Mario Draghi said 'took decision on liquidity; further diminishing of inflation pressure; inflation expectation continue to be firmly anchored; followed by gradual upward movement; ECB monetary policy stance will remain accommodative for as long as necessary ; governing council expects key ECB interest to remain at current or lower levels for extended period of time; this expectation is based on overall subdued outlook for inflation extending into medium term; extend full allotment in liquidity operations until at least July 2015; real income have benefited from generally lower inflation; growth risks are on downside; global money, financial market conditions downside risk; October inflation decline was stronger than expected; inflation expected to remain at low levels in coming months; inflation risks are broadly balanced; upside inflation risks in particular from commodity prices; weak loan dynamics reflect primarily business cycle; technically ready for negative deposit rate; possibility for negative deposit rate is part of our artillery; we have instruments, LTRO and negative deposit rate are some of them.'
Data to be released on Friday:
RBA monetary policy statement, Swiss unemployment rate, retail sales, U.K. trade balance, Germany current account, export, import, trade balance, France current account, trade balance, industrial production, manufacturing production, Canada housing starts, net change in unemployment, unemployment rate, U.S. personal income, personal consumption, PCE index, PCE core, non-farm payrolls, private payrolls, unemployment rate, average hourly earnings and University of Michigan consumer confidence.
Euro tumbles after ECB 0.25% rate cut
The single currency tumbled on Thursday after ECB unexpectedly cut interest rate to 0.25% together with the release of U.S. GDP data which came in stronger than economist's forecast. ECB cut refinancing rate to 0.25% and cut interest rate on marginal lending to 0.75%. U.S. GDP in Q3 came in at 2.8%, stronger than the forecast of 2.0%.
The single currency traded narrowly in Asian session and European morning. Euro tumbled to 1.3354 after ECB announced the interest rate decision and then fell to an intra-day low of 1.3295 in New York morning due to the release of strong U.S. GDP data. The pair later rebounded to 1.3450 in late New York as Dow Jones index turned negative and closed down by 153 points at 15594.
Versus Japanese yen, the greenback found support at 98.56 in Asian trading and then climbed higher to 98.75 in European morning. Dollar further jumped to a session high at 99.41 after the release of stronger-than-expected U.S. GDP data in New York morning. However, profit-taking offers together with active cross buying in jpy quickly emerged there and U.S. dollar tanked to intra-day low at 97.60 in late NY due to the sharp selloff in U.S. equities.
The British pound fell to 1.6065 in Asian session before rebounding to 1.6092 ahead of European open. The pair dropped to 1.6054 ahead of New York open after Bank of England rate decision and then further tanked to a session low at 1.6010 in tandem with euro's selloff and strong U.S. GDP data in New York morning. However, renewed buying interest there lifted price higher to 1.6114 in late New York b4 stabilizing.
Bank of England said 'leaves QE asset purchase total unchanged at 375 billion sterling; holds bank rate at 0.5%.'
ECB's President Mario Draghi said 'took decision on liquidity; further diminishing of inflation pressure; inflation expectation continue to be firmly anchored; followed by gradual upward movement; ECB monetary policy stance will remain accommodative for as long as necessary ; governing council expects key ECB interest to remain at current or lower levels for extended period of time; this expectation is based on overall subdued outlook for inflation extending into medium term; extend full allotment in liquidity operations until at least July 2015; real income have benefited from generally lower inflation; growth risks are on downside; global money, financial market conditions downside risk; October inflation decline was stronger than expected; inflation expected to remain at low levels in coming months; inflation risks are broadly balanced; upside inflation risks in particular from commodity prices; weak loan dynamics reflect primarily business cycle; technically ready for negative deposit rate; possibility for negative deposit rate is part of our artillery; we have instruments, LTRO and negative deposit rate are some of them.'
Data to be released on Friday:
RBA monetary policy statement, Swiss unemployment rate, retail sales, U.K. trade balance, Germany current account, export, import, trade balance, France current account, trade balance, industrial production, manufacturing production, Canada housing starts, net change in unemployment, unemployment rate, U.S. personal income, personal consumption, PCE index, PCE core, non-farm payrolls, private payrolls, unemployment rate, average hourly earnings and University of Michigan consumer confidence.
