acetraderfx
AceTrader.com Representative
- Messages
- 1,109
Market Review - 12/09/2013 22:29GMT
The greenback falls on fading expectation of Fed's tapering
The U.S. dollar weakened broadly on Thursday as doubts over whether the Federal Reserve will start tapering stimulus on the Federal Reserve's policy decision next week persisted after last week’s U.S. jobs report.
U.S. initial jobless claims fell sharply last week to 287K versus previous reading of 323K, dropping to the lowest level since 2006, however, the report said the decline was largely due to two states not processing all their claims because of computer upgrades.
Versus the yen, the dollar continued to move lower in Asia and extended fall from Wednesday's high of 100.62 to 99.20 at European open, however, the release of sharp drop in U.S. claims lifted price briefly to 99.73 in New York morning. Later, dollar's broad-based weakness pressured price again and the pair tanked to a fresh session low at 99.00 in New York afternoon before recovering.
The single currency retreated versus U.S. dollar in Asia after failure to penetrate Wednesday's high of 1.3325 and ratcheted lower in Europe in part due to active cross-selling of euro, price tanked to a session low of 1.3256 in New York morning after release of U.S. jobs report but climbed back above 1.3300 level to 1.3325 again later in the day due to dollar's broad-based weakness, last seen around 1.3300 near New York closing.
On the data front, report showed that industrial production in the euro area fell by 1.5 percent in July, the biggest drop in 12 months, and declined 2.1% on year-to-year basis to the lowest level since April 2010.
Cable dropped in tandem with euro in Asia and European trading and briefly fell to 1.5776 in New York morning, however, renewed dollar's broad-based weakness lifted price from there and cable later rose above Wednesday's high of 1.5832 to a fresh 7-month peak at 1.5840 before profit-taking pressured price to 1.5805.
In the other news, Bank of England Governor Mark Carney said on Thursday that 'if recovery were to falter, we would consider providing extra stimulus; economy is picking up, stimulus is working; although it is early days, we think we are on path to return inflation to 2%; one-member-one vote MPC is a strength of UK monetary policy system; uncertainties on UK productivity and labour market slack are larger than usual; new MPC members will need to declare if they will operate under forward guidance; rise in long-term interest rates in advanced economies is because of stronger growth outlook; need to make sure this is not another false dawn; sustainable rebalancing of U.K. economy requires return to productivity growth above what BoE forecasts; I am not afraid to raise interest rate if appropriate.'
In commodity currencies, RBNZ kept benchmark rate at 2.5 percent on Thursday but signalled interest rate hike next year, New Zealand dollar rose to a 3-week high of 0.8158 after the hawkish statement before easing. Meanwhile, Australian dollar tumbled from a near 3-month peak at 0.9355 to as low as 0.9227 after Australian employment change posted its worst showing in five months, a decrease of 10.8K versus market expectation of a gain of 10.0K and declined for the second straight month.
Data to be released on Friday:
New Zealand Business NZ PMI, ANZ consumer confidence, Japan industrial production, capacity utilization, EU trade balance, U.S. PPI, retail sales, university of Michigan consumer confidence, and business inventories.
The greenback falls on fading expectation of Fed's tapering
The U.S. dollar weakened broadly on Thursday as doubts over whether the Federal Reserve will start tapering stimulus on the Federal Reserve's policy decision next week persisted after last week’s U.S. jobs report.
U.S. initial jobless claims fell sharply last week to 287K versus previous reading of 323K, dropping to the lowest level since 2006, however, the report said the decline was largely due to two states not processing all their claims because of computer upgrades.
Versus the yen, the dollar continued to move lower in Asia and extended fall from Wednesday's high of 100.62 to 99.20 at European open, however, the release of sharp drop in U.S. claims lifted price briefly to 99.73 in New York morning. Later, dollar's broad-based weakness pressured price again and the pair tanked to a fresh session low at 99.00 in New York afternoon before recovering.
The single currency retreated versus U.S. dollar in Asia after failure to penetrate Wednesday's high of 1.3325 and ratcheted lower in Europe in part due to active cross-selling of euro, price tanked to a session low of 1.3256 in New York morning after release of U.S. jobs report but climbed back above 1.3300 level to 1.3325 again later in the day due to dollar's broad-based weakness, last seen around 1.3300 near New York closing.
On the data front, report showed that industrial production in the euro area fell by 1.5 percent in July, the biggest drop in 12 months, and declined 2.1% on year-to-year basis to the lowest level since April 2010.
Cable dropped in tandem with euro in Asia and European trading and briefly fell to 1.5776 in New York morning, however, renewed dollar's broad-based weakness lifted price from there and cable later rose above Wednesday's high of 1.5832 to a fresh 7-month peak at 1.5840 before profit-taking pressured price to 1.5805.
In the other news, Bank of England Governor Mark Carney said on Thursday that 'if recovery were to falter, we would consider providing extra stimulus; economy is picking up, stimulus is working; although it is early days, we think we are on path to return inflation to 2%; one-member-one vote MPC is a strength of UK monetary policy system; uncertainties on UK productivity and labour market slack are larger than usual; new MPC members will need to declare if they will operate under forward guidance; rise in long-term interest rates in advanced economies is because of stronger growth outlook; need to make sure this is not another false dawn; sustainable rebalancing of U.K. economy requires return to productivity growth above what BoE forecasts; I am not afraid to raise interest rate if appropriate.'
In commodity currencies, RBNZ kept benchmark rate at 2.5 percent on Thursday but signalled interest rate hike next year, New Zealand dollar rose to a 3-week high of 0.8158 after the hawkish statement before easing. Meanwhile, Australian dollar tumbled from a near 3-month peak at 0.9355 to as low as 0.9227 after Australian employment change posted its worst showing in five months, a decrease of 10.8K versus market expectation of a gain of 10.0K and declined for the second straight month.
Data to be released on Friday:
New Zealand Business NZ PMI, ANZ consumer confidence, Japan industrial production, capacity utilization, EU trade balance, U.S. PPI, retail sales, university of Michigan consumer confidence, and business inventories.
