Euro rebounds on short-covering on report ECB may not act next week: Aug 28, 2014

Market Review - 27/08/2014    22:51 GMT 
  
Euro rebounds on short-covering on report ECB may not act next week

The single currency penetrated Tuesday's New York low at 1.3164 and dropped initially to a fresh near 1-year trough of 1.3152 in Asian morning on Wednesday, however, euro rebounded on short-covering above option barrier at 1.3150 and price later jumped to 1.3210 in New York morning after ECB sources said 'new ECB action next week unlikely, but outcome much depends on August inflation data.' 

However, trading is relatively thin and euro traded inside a narrow range in New York as investors are waiting for the release of upcoming eurozone inflation data on Friday. Britain's FTSE-100 rose 0.1% whilst Germany's DAX dropped by 0.2%. The British pound tracked euro's movements closely. Cable dropped briefly to 1.6537 in Asian morning and then rebounded to 1.6606 in New York morning before retreating. 

On the data front, Germany's July import prices declined by 0.4% m/m and 1.7% y/y respectively. In a separate report, German Gfk consumer sentiment came in at 8.6 in September, down from downwardly revised 8.9 in August. In other news, Germany's Angela Merkel told President Vladimir Putin by phone that reports of a new Russian military incursion into Ukrainian territory had to be cleared up. 

Although the greenback briefly bounce to 104.16 in Asian morning on Wednesday, failure to penetrate Tuesday's New York res at 104.17 capped dollar's upside and price retreated to 103.79 in New York morning before trading sideways. 

Earlier in the day, Japan Vice EconMin Yasutoshi Nishimura said 'more caution needed on next sales-tax hike decision than on previous one; ready to take necessary policy steps to support economy, hopes Bank of Japan would decide to act as appropriate; sales-tax hike impact seems prolonged, concerned about consumption in summer; must bear in mind risk of interest rate spike if fiscal consolidation comes under question; economy making steady progress towards inflation target.' 

Thursday will see the release of Australia's HIA new home sales, building Capex and capital expenditure, Germany's unemployment rate and change, Italy's retail sales, eurozone business climate, consumer confidence and economic and industrial sentiment; U.K. CBI distributive trades; Germany's CPI and HICP, Canada's current account, U.S. PCE, GDP and pending home sales on Thursday.