Euro falls for 5 consecutive days after IMF data showed central banks reduced euro holdings: Apr 13, 2015

Market Review - 11/04/2015 02:02GMT 
 
Euro falls for 5 consecutive days after IMF data showed central banks reduced euro holdings

The single currency tumbled to as low as 1.0568 in NY morning due to dollar's broad-based strength, its weakest level since March 17. The euro posted its worst week against the greenback since September 2011.

Euro fell for 5 consecutive days on Friday, traders attributed euro's continued weakness on latest data from the International Monetary Fund (IMF) which showed central banks worldwide cut their euro holdings by the most on record, threatening euro's status as reserve currency. INF data shows euro now represents just 22% of global reserves, sharply lower from 28% before the euroz zone financial crisis in 2009.

Fed's Kocherlakota repeated his call for delay to rate hikes until 2nd half of 2016, and said there was no shame in adjusting them lower again if economic data demanded it.

Fed's Lacker said 'case for raising U.S. interest rates will remain strong at June FOMC meeting; drop in oil prices n rising dollar will be transitory; core inflation likely to move back towards 2% this year; weak economic data may be attributable to adverse weather; there was a pretty substantial amount of support for June rate hike at last FOMC meeting; does not see a problem of hiking rates and then moving back to zero if needed.'

The greenback ratcheted lower from Thursday's high at 120.74 to an intra-day low of 120.06 due to cross buying in Japanese yen. Euro tumbled against the Japanese yen from 128.79 to 127.20.

Bank of Japan's Nakaso said 'any cut in BoJ's inflation forecasts won't trigger monetary easing if underlying trend of inflation is improving; additional monetary easing is unnecessary as long as there's no change to underlying trend of inflation; Japan's economy recovering gradually, underlying trend of inflation improving steadily; BoJ won't hesitate to adjust policy if it sees any change in underlying trend of inflation; have no intention of changing BoJ's commitment to hit 2% inflation in roughly 2 years, which is core aim of QQE; don't think BoJ will face problem buying JGBs as it proceeds with QQE; must be mindful of overseas risks, notably situation in Greece, that may disrupt positive momentum of Japan's economy; Greek exit from euro, even if it happens accidentally, could disrupt markets, have reprecussions for Japan's economy.'

The British pound hit a five-year low of 1.4585 versus U.S. dollar before rebounding to 1.4669 on short-covering.

This week will see the release of Bank of Japan meeting minutes, China imports, exports and trade balance and U.S. Federal budget on Monday.

New Zealand NZIER confidence, U.K. BRC retail sales, Australia's NAB business confidence, Germany's WPI, U.K. CPI, PPI and RPI, eurozone industrial production, U.S. retail sales, Redbook and business inventories on Tuesday.

Australia's consumer sentiment, China's GDP, industrial output, retail sales and GDP, Japan's capacity utilization index and revised industrial output, Germany's final CPI and HICP, eurozone rate decision and ECB's president Draghi press conference, Canada's manufacturing sales, U.S. NAHB housing market index, foreign buying, net long-term flows and overall net capital flows on Wednesday.

New Zealand manufacturing PMI, Australia's unemployment rate, U.S. building permits, housing starts and Philly Fed business index on Thursday.

Japan's consumer confidence index, Swiss retail sales, eurozone current account, U.K. ILO unemployment rate, eurozone inflation data, U.S. CPI, Canada's CPI and retail sales on Friday.