Market Review - 23/10/2013 20:48GMT


Japanese yen rises broadly on renewed risk aversion


The Japanese yen rose broadly against major currencies on renewed risk aversion after short-term borrowing costs for Chinese banks jumped by the most since July.  


The greenback met selling interest at 98.19 against the Japanese yen at Tokyo open, price tumbled to 97.26 in Asian session due to the increase in China's seven-day repurchase rate. U.S. dollar further fell to 97.15 in European morning before rebounding to 97.49 in New York morning.  


Although the single currency rose marginally above Tuesday's high at 1.3792 to 1.3793 in Asian trading, profit-taking pressured price in Europe and euro weakened to a session low at 1.3741 ahead of New York open. Euro later ratcheted higher to a fresh near 2-year high at 1.3794 in New York afternoon before stabilizing.  


The British pound rose above Tuesday's high at 1.6248 to 1.6258 in Asian session, however, selling interest quickly emerged below Oct's near 9-month peak at 1.6260 and cable tumbled in European morning due to active cross selling in sterling. The pound fell to a session low at 1.6119 after the release of minutes from Bank of England in European morning. The minutes stated policy makers were unanimous in rejecting hiking interest rate and keeping their quantitative-easing target at 375 billion pounds. Cable then rebounded to 1.6183 in New York midday.  


Bank of England's minutes showed 'probable that unemployment will be lower and output growth faster in H2 2013 than forecast in Aug; bank staff expect H2 GDP growth of 0.7% a quarter or a little higher, recent news suggests robust recovery; risk that U.K. recovery might be less well balanced towards exports than ultimately needed due to global outlook; usually hard to gauge slack in U.K. labour market, MPC has range of views on productivity, too early to draw conclusions; sterling strength may reflect stronger data, lower U.K. financial system risk; will help lower inflation; indicators point to further house price rises, this will boost households' collateral and help growth.' 


In the other news, Bank of Japan's governor Kuroda says 'Japan is making steady progress toward meeting 2% inflation goal; expect prices to continue rising as negative output gap narrows energy costs is not the only reason behind gains in Japan CPI.' 


On the data front, euro zone consumer confidence in October came in at -14.5, same as expectation. U.S. home price index in August came in at 0.3%, worse than the forecast of 0.8%, previous reading was revised to 0.8%.  


Data to be released on Thursday :  


New Zealand Trade balance, exports, imports, China HSBC flash manufacturing PMI, France PMI manufacturing, PMI service, Germany PMI manufacturing, PMI service, EU PMI manufacturing, PMI service, Italy consumer confidence, U.K. CBI industrial trend, U.S. jobless claims, Markit PMI and new home sales.