Market Review - 22/04/2014 22:31GMT
Dollar trades flat against other major currencies in quiet trading
The greenback was little changed against other major currencies in quiet trading on Tuesday after data showed that U.S. existing home sales fell less than expected in March, while manufacturing activity in the Richmond region rose this month.
During the day, although the single currency traded sideways in Asia and then briefly fell below Monday's low at 1.3787 to 1.3785 in European morning, lack of follow through selling prompted short covering and price was lifted to 1.3825 in New York morning. However, sentiment on the single currency remained fragile after the dovish comments from ECB's policymakers said earlier in the day that the central bank is ready to act to keep inflation from falling. Euro later dropped to 1.3795 and then orbited around 1.3800 for rest of the New York session.
ECB's Coeure said 'we still have further margin to reduce the main 0.25% interest rate; bank considering whether euro level is a risk that could slow return to 2% inflation target; changes could bring deposit rate into negative territory, QE remains possible.' ECB's Linde said 'ECB ready to act if inflation in Apr and May show that the danger of inflation being too loo for too long is there; any QE programme is not easy to implement.'
Against the Japanese yen, although dollar extended its recent ascent and rose above Monday's high of 102.71 to a fresh near 2-week peak at 102.73 at Tokyo open, risk aversion due to the decline in Nikkei triggered broad-based buying in yen and the pair fell to 102.41 in European morning before recovering. Dollar rebounded to 102.66 in New York morning after release of better-than-expected U.S. existing home sales reports and then moved sideways in quiet New York afternoon.
U.S. existing home sales fell by 0.2% in March, to an annual rate of 4.59 million. It was the weakest rate since July 2012, but came in ahead of expectations for 4.55 million.
The British pound found support at 1.6785 against the dollar in Asia on Tuesday and jumped at European open as European traders seemed to react positively to the mega-M&A news of Pfizer's potential offer to buy U.K. AstraZeneca. Later, cable rose to 1.6839 but selling below last Thursday 4-1/2 year peak at 1.6842 knocked price down in New York morning, price fell to 1.6813 in tandem with euro before staging another rebound to 1.6836.
In other news, China Central Bank said 'to cut reserve requirement ratio for some rural banks between 0.5% n 2% points; RRR cut for rural banks to be effective from April 25; to continue implement prudent monetary policy; RRR cut will not affect overall banking liquidity; to keep liquidity conditions appropriate, keep credit growth at reasonable pace.'
Data to be released on Tuesday:
Australia CPI, China HSBC manufacturing PMI, France manufacturing and service PMI, Germany manufacturing and service PMI, euro zone manufacturing and service PMI, BoE minutes, MPC vote outcome, U.K. PSNCR, public sector net borrowing, CBI trends, Canada retail sales, U.S. manufacturing PMI and new home sales.
Dollar trades flat against other major currencies in quiet trading
The greenback was little changed against other major currencies in quiet trading on Tuesday after data showed that U.S. existing home sales fell less than expected in March, while manufacturing activity in the Richmond region rose this month.
During the day, although the single currency traded sideways in Asia and then briefly fell below Monday's low at 1.3787 to 1.3785 in European morning, lack of follow through selling prompted short covering and price was lifted to 1.3825 in New York morning. However, sentiment on the single currency remained fragile after the dovish comments from ECB's policymakers said earlier in the day that the central bank is ready to act to keep inflation from falling. Euro later dropped to 1.3795 and then orbited around 1.3800 for rest of the New York session.
ECB's Coeure said 'we still have further margin to reduce the main 0.25% interest rate; bank considering whether euro level is a risk that could slow return to 2% inflation target; changes could bring deposit rate into negative territory, QE remains possible.' ECB's Linde said 'ECB ready to act if inflation in Apr and May show that the danger of inflation being too loo for too long is there; any QE programme is not easy to implement.'
Against the Japanese yen, although dollar extended its recent ascent and rose above Monday's high of 102.71 to a fresh near 2-week peak at 102.73 at Tokyo open, risk aversion due to the decline in Nikkei triggered broad-based buying in yen and the pair fell to 102.41 in European morning before recovering. Dollar rebounded to 102.66 in New York morning after release of better-than-expected U.S. existing home sales reports and then moved sideways in quiet New York afternoon.
U.S. existing home sales fell by 0.2% in March, to an annual rate of 4.59 million. It was the weakest rate since July 2012, but came in ahead of expectations for 4.55 million.
The British pound found support at 1.6785 against the dollar in Asia on Tuesday and jumped at European open as European traders seemed to react positively to the mega-M&A news of Pfizer's potential offer to buy U.K. AstraZeneca. Later, cable rose to 1.6839 but selling below last Thursday 4-1/2 year peak at 1.6842 knocked price down in New York morning, price fell to 1.6813 in tandem with euro before staging another rebound to 1.6836.
In other news, China Central Bank said 'to cut reserve requirement ratio for some rural banks between 0.5% n 2% points; RRR cut for rural banks to be effective from April 25; to continue implement prudent monetary policy; RRR cut will not affect overall banking liquidity; to keep liquidity conditions appropriate, keep credit growth at reasonable pace.'
Data to be released on Tuesday:
Australia CPI, China HSBC manufacturing PMI, France manufacturing and service PMI, Germany manufacturing and service PMI, euro zone manufacturing and service PMI, BoE minutes, MPC vote outcome, U.K. PSNCR, public sector net borrowing, CBI trends, Canada retail sales, U.S. manufacturing PMI and new home sales.
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