Dollar retreats broadly on soft U.S. data: Apr 2, 2015

Market Review - 01/04/2015 22:51GMT 
 
Dollar retreats broadly on soft U.S. data

Despite staging a brief rebound to 1.0792, the single currency fell again and weakened to an intra-day low of 1.0719 in European morning, however, short-covering above Tuesday's low at 1.0713 lifted the pair. Euro then rebounded to an intra-day high at 1.0800 in New York after the release of weaker-than-expected U.S. economic data. U.S. ADP employment data which came in less-than-expected at 189,000 versus economists' forecast of 230,000 whilst ISM manufacturing PMI was 51.5 versus the expectation of 52.5 and below previous reading of 52.9.

Greek FinMin official said 'Athens sent Brussels group more details on reforms on Wednesday; toughest issues in talks with lenders are labour and pension reforms.' Two banking sources told Reuters on Wednesday that the European Central Bank has raised the cap on emergency liquidity assistance (ELA) that Greek banks can draw from the country's central bank by 700 million euros. The increase takes the ELA ceiling to 71.8 billion euros. The ECB has raised the cap in increments, keeping pressure on Athens to strike a deal with its creditors.

The greenback tumbled in hectic Tokyo morning as intra-day fall in the Nikkei index (following o/n decline in the Dow) triggered broad-based buying of yen on risk aversion. Dollar easily penetrated said Tuesday's low at 119.78 low, tripping stops below there and price later tanked to 119.42 before rebounding strongly to 120.33 in Europe on speculation of further stimulus by Bank of Japan in April, however, the pair fell again and re-tested 119.42 after the release of weak U.S. economic data before recovering later in the day.

Bank of Japan official said Tankan show big manufacturers, non-manufacturers see labour market conditions at tightest levels since 2008; tankan indexes show small manufacturers, non-manufacturers see labour conditions at tightest levels since 1992. Japanese ruling party lawmaker n one of the architects of premier Shinzo Abe's "Abenomics" reflationary policies said the Bank of Japan must ease monetary policy further at its rate review on Apr 30 given signs of slowdown in the economy and prices.

Fed's Lockhart said 'does not expect new tools like overnight repos to be permanent features of Fed policy; expects Fed will still have substantial control over short-term rates once liftoff begins; still feels there is considerable utilisation in labor markets; measurements more accurate than those of economic growth, and should be watched closely in deciding liftoff date.'

Despite the release of slightly better-than-expected U.K. manufacturing PMI, cable fell to as low as 1.4740 in Europe due to euro's intra-day weakness, however, short-covering together with the release of less-than-expected U.S. ADP employment data lifted cable to 1.4847 in New York.

Thursday will see the release of Australia's trade balance, U.K. Markit constructions PMI, U.S. jobless claims, Canada's import, export and trade balance, U.S. ISM New York index, durable goods and factory orders.