U.S. dollar little changes ahead of Friday's speech by Fed's Chair Yellen: May 22, 2015

Market Review - 21/05/2015 22:50 All times in GMT 
 
U.S. dollar little changes ahead of Friday's speech by Fed's Chair Yellen

The single currency swung wildly on Thursday. Euro fell from Asian high at 1.1130 to a low of 1.1079 at European open, however, active short-covering above Wednesday's low at 1.1062 lifted the pair to as high as 1.1181 in Europe before retreating to 1.1105 after the release of dovish ECB's minutes.

ECB's minutes stated 'members agreed that emphasis needed to be placed on steady course, firm implementation of QE; strong signal needed to be sent to eurozone governments over need for structural reforms; policy measures are working as intended; growth, inflation outlook have improved but forecasts predicated on the full implementation of policy measures; it was remarked that impact of measures on real economy n inflation required more time to unfold; wide agreement that QE progressing smoothly, concerns about scarcity of supply were overstated; members agreed that there was no need to consider any change in monetary policies.'

ECB's Draghi said growth is too low everywhere. Germany's Schaeuble said 'recent rise in yields on German government bonds is cause for hope rather than concern; negative interest rates are not desirable for sustainable growth; it's positive that the euro zone as a whole has moved away from negative inflation rates and that interest rates on government bonds have risen slightly again; recent rise in bund interest rates is good sign for life insurers too.

Schaeuble said Greece is likely to be a topic at G7 meeting in Dresden next week; will possibly talk informally about the increased importance of the Chinese currency at G7 meeting next week; will talk about the limits of monetary policy at G7 meeting next week and the question of how to avoid bubbles; we need to make sure that we don't cause overheating with investment, that would lead to price increases and not sustainable growth.'

Although the greenback moved in a volatile fashion on Wednesday following the release of FOMC minutes, the greenback ratcheted lower on Thursday from Australian high at 121.38 to 120.85 in Europe before rebounding to 121.26 in New York.

U.S. Federal Reserve Vice Chair Stanley Fischer on Thursday said the euro zone crisis had made the monetary union stronger and proved that the European Central Bank has the ability to carry out effective policy in the region.

Despite cable's brief retreat from Asian 1.5561 high to 1.5525 at European open on Thursday, the British pound jumped abv Wednesday's 1.5588 high after the release of much stronger-than-expected retail sales. Cable rose to as high as 1.5700 and then retreated to 1.5645 before trading sideways in New York.

The U.K. ONS said on Thur that retail sales in U.K. increased by a seasonally adjusted 1.2% in Apr, easily surpassing forecasts for a gain of 0.4%. Retail sales in Mar fell by 0.7%, whose figure was revised from a previously reported decline of 0.5%. Year-on-year, retail sales increased at an annualized rate of 4.7% in Apr, beating expectations for a 3.8% gain, after rising at a rate of 4.0% in Mar.

Friday will see the release of Japan's Tankan DI, China's CB leading economic index, Bank of Japan monetary policy statement and press conference, Germany's GDP, Ifo business climate, U.K. PSNCR, U.S. CPI, Canada's CPI and retail sales. Investors are awaiting a speech on Friday by Fed Chair Janet Yellen to have any indication of the timing of interest rates hike.