Market Review - 28/01/2015 22:42GMT
U.S. dollar mixed as Fed stays patient on rate hike
The greenback traded mixed after the Federal Reserve maintained its pledge to be "patient" on rate hike and no longer contained "considerable time" phrase. U.S. dollar strengthened against most of the major currencies, except the Japanese yen, after the statement.
Versus the Japanese yen, despite dollar's brief rise to 118.26 shortly after Asian open on Wednesday, price ratcheted lower to 117.55 in European morning on active cross-buying in yen. Later, despite a brief rebound after the release of unchanged Fed rate decision, renewed active cross-buying in yen versus other major currencies pushed price lower to 117.45 and then 117.28 near New York closing.
Fed held rate unchanged in a range of 0.0%-0.25% on Wednesday. In the statement, Fed repeated 'can be "patient" in beginning to normalize stance of monetary policy; economy expanding at solid pace, with strong job gains and a lower unemployment rate; inflation has declined and may decline further, but should increase over the medium term as labor market improves and temporary effects of low energy prices fade; some market-based measures of inflation compensation have declined substantially, while survey-based measures of longer-term inflation expectations have remained stable; risks to labor market, economy remain nearly balanced; labor market slack continues to diminish; committee continues to monitor inflation developments closely; timing of rate hikes continues to depend on incoming information, progress toward inflation, employment objectives; Fed vote in favor of policy was unanimous.'
Although the single currency rebounded from Asian low at 1.1331 to 1.1383 in European morning, cross-selling in euro checked intra-day gain there and price dropped to 1.1327 and then 1.1307 in New York morning. Later, despite a brief rebound to 1.1370 after the release of unchanged Fed rate decision, renewed broad based strength in greenback knocked price down to a fresh intra-day low at 1.1282 near New York closing before staging a recovery.
Cable tracked euro's intra-day move closely on Wednesday, despite a rebound from Asian low at 1.5155 to 1.5220 in European morning, renewed selling below Tuesday's high of 1.5223 checked intra-day there and price then ratcheted lower to 1.5161 in New York morning. Later, despite a brief rebound to 1.5203 after the release of unchanged Fed rate decision, price tanked to a fresh intra-day low of 1.5136 near New York closing before recovering.
On the data front, Gfk showed Germany's Gfk consumer climate rose more-than-expected last month on Wednesday. The research group said that its index of Germany's consumer climate rose to 9.3, from 9.0 in the preceding month. Economists had expected the reading to rise to 9.1.
Earlier on Wednesday, Reserve Bank of Australia said that Australian trimmed mean CPI rose to a seasonally adjusted 0.7%, from 0.4% in the preceding quarter. Market had expected Australian trimmed mean CPI to rise 0.5% in the last quarter. Meanwhile, a report from the Australian Bureau of Statistics said that CPI in Australia rose to 0.2%, from 0.5% in the preceding quarter. The Australian dollar rose sharply from 0.8900 to 0.8010 versus the greenback shortly after the release of data and then climbed to an intra-day high of 0.8026 ahead of European open before retreating, dropping to 0.7941 and later moved sideways in New York session.
In other news, RBNZ announced to hold rate unchanged at 3.50% in late Wednesday but said 'drops reference to need for higher rates'. In the following statement, the New Zealand's central bank said 'expects to keep rates on hold for some time; further rate moves, either up or down, to depend on data; inflation to be under target band through 2015; inflation to move to 2% more slowly; high NZ$, falling oil prices causing traded goods inflation to be very weak; signs housing market picking up; headline annual inflation expected to be below target through 2015; economy growing above 3% on construction, households; inflation to move back toward target slower than previously expected; lower dairy payout, possible drought, NZ dollar to weigh on growth; trading partner outlook weaker than previously expected; NZ$ remains unjustifiably high; expects further significant fall in NZ$.'
Thursday will see the release of New Zealand's Trade Balance, Exports, Imports, Japan's Retail Sales, Australia's CB leading indicator, Exports, Imports, France's Consumer Spending, Germany's Unemployment rate, unemployment change, CPI, HICP, Italy's Wage Inflation, euro zone's Business Climate, Consumer Inflation Expectation, Consumer Confidence, Economic Sentiment, Industrial Sentiment, Italy's Consumer Confidence, U.K.'s Nationwide House Prices, CBI Distributive Trades, U.S.'s Initial Jobless Claims, Pending home sales
U.S. dollar mixed as Fed stays patient on rate hike
The greenback traded mixed after the Federal Reserve maintained its pledge to be "patient" on rate hike and no longer contained "considerable time" phrase. U.S. dollar strengthened against most of the major currencies, except the Japanese yen, after the statement.
Versus the Japanese yen, despite dollar's brief rise to 118.26 shortly after Asian open on Wednesday, price ratcheted lower to 117.55 in European morning on active cross-buying in yen. Later, despite a brief rebound after the release of unchanged Fed rate decision, renewed active cross-buying in yen versus other major currencies pushed price lower to 117.45 and then 117.28 near New York closing.
Fed held rate unchanged in a range of 0.0%-0.25% on Wednesday. In the statement, Fed repeated 'can be "patient" in beginning to normalize stance of monetary policy; economy expanding at solid pace, with strong job gains and a lower unemployment rate; inflation has declined and may decline further, but should increase over the medium term as labor market improves and temporary effects of low energy prices fade; some market-based measures of inflation compensation have declined substantially, while survey-based measures of longer-term inflation expectations have remained stable; risks to labor market, economy remain nearly balanced; labor market slack continues to diminish; committee continues to monitor inflation developments closely; timing of rate hikes continues to depend on incoming information, progress toward inflation, employment objectives; Fed vote in favor of policy was unanimous.'
Although the single currency rebounded from Asian low at 1.1331 to 1.1383 in European morning, cross-selling in euro checked intra-day gain there and price dropped to 1.1327 and then 1.1307 in New York morning. Later, despite a brief rebound to 1.1370 after the release of unchanged Fed rate decision, renewed broad based strength in greenback knocked price down to a fresh intra-day low at 1.1282 near New York closing before staging a recovery.
Cable tracked euro's intra-day move closely on Wednesday, despite a rebound from Asian low at 1.5155 to 1.5220 in European morning, renewed selling below Tuesday's high of 1.5223 checked intra-day there and price then ratcheted lower to 1.5161 in New York morning. Later, despite a brief rebound to 1.5203 after the release of unchanged Fed rate decision, price tanked to a fresh intra-day low of 1.5136 near New York closing before recovering.
On the data front, Gfk showed Germany's Gfk consumer climate rose more-than-expected last month on Wednesday. The research group said that its index of Germany's consumer climate rose to 9.3, from 9.0 in the preceding month. Economists had expected the reading to rise to 9.1.
Earlier on Wednesday, Reserve Bank of Australia said that Australian trimmed mean CPI rose to a seasonally adjusted 0.7%, from 0.4% in the preceding quarter. Market had expected Australian trimmed mean CPI to rise 0.5% in the last quarter. Meanwhile, a report from the Australian Bureau of Statistics said that CPI in Australia rose to 0.2%, from 0.5% in the preceding quarter. The Australian dollar rose sharply from 0.8900 to 0.8010 versus the greenback shortly after the release of data and then climbed to an intra-day high of 0.8026 ahead of European open before retreating, dropping to 0.7941 and later moved sideways in New York session.
In other news, RBNZ announced to hold rate unchanged at 3.50% in late Wednesday but said 'drops reference to need for higher rates'. In the following statement, the New Zealand's central bank said 'expects to keep rates on hold for some time; further rate moves, either up or down, to depend on data; inflation to be under target band through 2015; inflation to move to 2% more slowly; high NZ$, falling oil prices causing traded goods inflation to be very weak; signs housing market picking up; headline annual inflation expected to be below target through 2015; economy growing above 3% on construction, households; inflation to move back toward target slower than previously expected; lower dairy payout, possible drought, NZ dollar to weigh on growth; trading partner outlook weaker than previously expected; NZ$ remains unjustifiably high; expects further significant fall in NZ$.'
Thursday will see the release of New Zealand's Trade Balance, Exports, Imports, Japan's Retail Sales, Australia's CB leading indicator, Exports, Imports, France's Consumer Spending, Germany's Unemployment rate, unemployment change, CPI, HICP, Italy's Wage Inflation, euro zone's Business Climate, Consumer Inflation Expectation, Consumer Confidence, Economic Sentiment, Industrial Sentiment, Italy's Consumer Confidence, U.K.'s Nationwide House Prices, CBI Distributive Trades, U.S.'s Initial Jobless Claims, Pending home sales
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0650 after US data
EUR/USD retreats from session highs but manages to hold above 1.0650 in the early American session. Upbeat macroeconomic data releases from the US helps the US Dollar find a foothold and limits the pair's upside.
GBP/USD retreats toward 1.2450 on modest USD rebound
GBP/USD edges lower in the second half of the day and trades at around 1.2450. Better-than-expected Jobless Claims and Philadelphia Fed Manufacturing Index data from the US provides a support to the USD and forces the pair to stay on the back foot.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Ripple faces significant correction as former SEC litigator says lawsuit could make it to Supreme Court
Ripple (XRP) price hovers below the key $0.50 level on Thursday after failing at another attempt to break and close above the resistance for the fourth day in a row.
Have we seen the extent of the Fed rate repricing?
Markets have been mostly consolidating recent moves into Thursday. We’ve seen some profit taking on Dollar longs and renewed demand for US equities into the dip. Whether or not this holds up is a completely different story.