Market Review - 20/05/2015 22:49GMT
U.S. dollar swings wildly after the release of FOMC minutes
The single currency met renewed selling at 1.1154 in Asian morning on Wednesday and then tumbled to 1.1062 in European morning following this week's selloff, however, short-covering lifted price to 1.1145. Despite brief jump to 1.1142 after the release of FOMC minutes, euro fell to 1.1070 and then rebounded to 1.1142 before retreating again.
According to minutes from the U.S. Federal Reserve's April policy meeting released on Wednesday, many officials believed it would be premature to raise interest rates in June and that a bump in inflation was being offset by a weaker labor market and softer data. The minutes also showed most participants expected the U.S. economy to pick up pace after a slowdown in the first quarter and that labor market conditions would improve.
But Fed officials also flagged a number of concerns weighing on the central bank, including disappointment that falling oil prices did not spur consumer spending as much as some of them had hoped. Economic worries in China and Greece were also cited. The minutes largely reflected the Fed's April policy statement, which pointed to economic softness but described the slow growth as reflecting, in part, transitory factors. The minutes also mentioned concerns about bond market volatility and the possibility of long-term rates spiking when the Fed begins to raise rates - a worry Yellen spoke of in public remarks earlier this month.
Greek Finance Minister Yanis Varoufakis said Athens must reach a reforms deal with its European Union and International Monetary Fund lenders to unlock aid by early June. Banking source also said that ECB raises emergency funding (ELA) cap for Greek banks by 200 million euros to 80.2 billion. German Finance Minister Wolfgang Schaeuble told the Wall Street Journal he would have to "think very hard" before repeating an assurance that Greece will not default.
Despite dollar's brief retreat to 120.58 against the Japanese yen in Australia on Wednesday, the greenback ratcheted higher due to the rise in Nikkei-225 index. U.S. dollar climbed to 121.10 in European morning and then 121.48 after the release of FOMC minutes. The pair retreated to 120.91 on profit-taking before rebounding.
Although the British pound met selling interest at 1.5524 in Asian morning and retreated to session low at 1.5472 at European open, price pared its losses and rebounded strongly to 1.5558 in European morning after MPC minutes showed 2 policy members felt decision between raising rates or keeping them on hold was finely balanced. Cable continued to ratchet higher and hit session high at 1.5588 in NY morning on cross-buying of sterling versus euro before retreating ahead of FOMC minutes.
Thursday will see the release of Australia's consumer inflation expectation, Japan's Nomural/JMMA Mfg PMI, New Zealand's budget cash balance, Japan's all industry activity, Germany's and eurozone Markit comp., service and manufacturing flash PMI respectively, U.K. retail sales, CBI trend trade, U.S. initial jobless claims, Chicago Fed actively index, Philly Fed business index and existing home sales. Investors are awaiting a speech on Friday by Fed Chair Janet Yellen to have any indication of the timing of interest rates hike.
U.S. dollar swings wildly after the release of FOMC minutes
The single currency met renewed selling at 1.1154 in Asian morning on Wednesday and then tumbled to 1.1062 in European morning following this week's selloff, however, short-covering lifted price to 1.1145. Despite brief jump to 1.1142 after the release of FOMC minutes, euro fell to 1.1070 and then rebounded to 1.1142 before retreating again.
According to minutes from the U.S. Federal Reserve's April policy meeting released on Wednesday, many officials believed it would be premature to raise interest rates in June and that a bump in inflation was being offset by a weaker labor market and softer data. The minutes also showed most participants expected the U.S. economy to pick up pace after a slowdown in the first quarter and that labor market conditions would improve.
But Fed officials also flagged a number of concerns weighing on the central bank, including disappointment that falling oil prices did not spur consumer spending as much as some of them had hoped. Economic worries in China and Greece were also cited. The minutes largely reflected the Fed's April policy statement, which pointed to economic softness but described the slow growth as reflecting, in part, transitory factors. The minutes also mentioned concerns about bond market volatility and the possibility of long-term rates spiking when the Fed begins to raise rates - a worry Yellen spoke of in public remarks earlier this month.
Greek Finance Minister Yanis Varoufakis said Athens must reach a reforms deal with its European Union and International Monetary Fund lenders to unlock aid by early June. Banking source also said that ECB raises emergency funding (ELA) cap for Greek banks by 200 million euros to 80.2 billion. German Finance Minister Wolfgang Schaeuble told the Wall Street Journal he would have to "think very hard" before repeating an assurance that Greece will not default.
Despite dollar's brief retreat to 120.58 against the Japanese yen in Australia on Wednesday, the greenback ratcheted higher due to the rise in Nikkei-225 index. U.S. dollar climbed to 121.10 in European morning and then 121.48 after the release of FOMC minutes. The pair retreated to 120.91 on profit-taking before rebounding.
Although the British pound met selling interest at 1.5524 in Asian morning and retreated to session low at 1.5472 at European open, price pared its losses and rebounded strongly to 1.5558 in European morning after MPC minutes showed 2 policy members felt decision between raising rates or keeping them on hold was finely balanced. Cable continued to ratchet higher and hit session high at 1.5588 in NY morning on cross-buying of sterling versus euro before retreating ahead of FOMC minutes.
Thursday will see the release of Australia's consumer inflation expectation, Japan's Nomural/JMMA Mfg PMI, New Zealand's budget cash balance, Japan's all industry activity, Germany's and eurozone Markit comp., service and manufacturing flash PMI respectively, U.K. retail sales, CBI trend trade, U.S. initial jobless claims, Chicago Fed actively index, Philly Fed business index and existing home sales. Investors are awaiting a speech on Friday by Fed Chair Janet Yellen to have any indication of the timing of interest rates hike.
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