Market Review - 02/07/2014 22:51GMT
Dollar strengthens on Wednesday after upbeat U.S. private jobs report
The greenback was broadly higher against other major currencies on Wednesday, except versus sterling, as the release of upbeat U.S. private sector in June eased concerns over the outlook for the U.S. recovery after data last week showing a sharp economic contraction in the first quarter, however, gain was limited as investors turned their attention to Thursday's U.S. non-farm payrolls report and the European Central Bank’s monthly policy meeting.
Versus the Japanese yen, although dollar retreated after rising to 101.65 in Asia on Wednesday, renewed buying interest on renewed broad-based selling in yen lifted price in Europe and price surged to 101.78 in New York morning after data showed U.S. private sector added more jobs than expected in June. Later, dollar climbed higher to 101.84 in New York afternoon before easing.
The latest ADP non-farm payrolls report showed that the U.S private sector added 281,000 jobs last month, outstripping expectations for an increase of 200,000 and the highest since November 2012. Later in a separate report, data showed that U.S. factory orders fell by a larger than forecast 0.5% in May.
The single currency retreated after meeting renewed selling at 1.3683 in Australia and came under pressure in Asia as sentiment on the euro was hit by concerns that the European Central Bank may voice concerns over the currency's strength at its post-policy meeting press conference on Thursday. Price retreated to 1.3656 in European morning and then recovered to 1.3670 before falling further to 1.3643 in New York morning as robust ADP employment change data triggered broad-based buying in greenback.
On the data front, Eurostat said on Wednesday that its producer price index fell for the fifth consecutive month in May and eased down by a seasonally adjusted 0.1%, in line with expectations.
Cable resumed its winning streak and rose to a fresh near 6-year high of 1.7080 in Europe on Wednesday as data showed that the U.K. construction sector expanded at the fastest rate in four months in June, adding to optimism over the economic recovery. However, lack of follow-though buying prompted profit-taking and price retreated to 1.7141 in New York morning on dollar's broad-based strength after release of upbeat U.S. private jobs report. Later. Cable recovered to 1.7073 and then moved in a choppy fashion inside 1.7041-1.7073 for rest of the New York session.
The Markit U.K. construction purchasing managers’ index rose to 62.6 in June from 60.0 in May, the highest reading since February. The consensus forecast had been for a decline to 59.5.
In other news, Federal Reserve Chair Janet Yellen said on Wednesday, 'monetary policy not best tool to promote financial stability, macroprudential regulation needs to play primary role; may be times monetary policy should adjust to address financial stability risks, clear communication needed on how risks impact policy stance; united states faces no pressing financial stability concerns at present, leaving monetary policy free to focus on inflation and unemployment; increased risk-taking in corporate bonds, leveraged lending could cause future problems, needs monitoring' efforts to make financial system more resilient critical to overall stability; higher interest rates in the early 2000s would not have prevented the crisis, or addressed systemic risks in the economy; crisis might have been avoided with policies that limited leverage, short-term funding and forced stronger underwriting; united states has made considerable progress in making banks more resilient, but still needs to tighten use of short-term funding.'
Data to be released on Thursday:
China NBS non-manufacturing PMI, HSBC service PMI, Australia building approvals, retails sales, Japan service PMI, France Markit/ABACI service PMI, Fracne Markit service PMI, Germany Markit service PMI, euro zone Markit service PMI, retails sales, ECB rate decision, U.K. Markit/CIPS service PMI, Canada trade balance, exports, imports, U.S. non-farm payrolls, unemployment rate, jobless claims, average earnings, trade balance, Markit service PMI, ISM non-manufacturing PMI.
Dollar strengthens on Wednesday after upbeat U.S. private jobs report
The greenback was broadly higher against other major currencies on Wednesday, except versus sterling, as the release of upbeat U.S. private sector in June eased concerns over the outlook for the U.S. recovery after data last week showing a sharp economic contraction in the first quarter, however, gain was limited as investors turned their attention to Thursday's U.S. non-farm payrolls report and the European Central Bank’s monthly policy meeting.
Versus the Japanese yen, although dollar retreated after rising to 101.65 in Asia on Wednesday, renewed buying interest on renewed broad-based selling in yen lifted price in Europe and price surged to 101.78 in New York morning after data showed U.S. private sector added more jobs than expected in June. Later, dollar climbed higher to 101.84 in New York afternoon before easing.
The latest ADP non-farm payrolls report showed that the U.S private sector added 281,000 jobs last month, outstripping expectations for an increase of 200,000 and the highest since November 2012. Later in a separate report, data showed that U.S. factory orders fell by a larger than forecast 0.5% in May.
The single currency retreated after meeting renewed selling at 1.3683 in Australia and came under pressure in Asia as sentiment on the euro was hit by concerns that the European Central Bank may voice concerns over the currency's strength at its post-policy meeting press conference on Thursday. Price retreated to 1.3656 in European morning and then recovered to 1.3670 before falling further to 1.3643 in New York morning as robust ADP employment change data triggered broad-based buying in greenback.
On the data front, Eurostat said on Wednesday that its producer price index fell for the fifth consecutive month in May and eased down by a seasonally adjusted 0.1%, in line with expectations.
Cable resumed its winning streak and rose to a fresh near 6-year high of 1.7080 in Europe on Wednesday as data showed that the U.K. construction sector expanded at the fastest rate in four months in June, adding to optimism over the economic recovery. However, lack of follow-though buying prompted profit-taking and price retreated to 1.7141 in New York morning on dollar's broad-based strength after release of upbeat U.S. private jobs report. Later. Cable recovered to 1.7073 and then moved in a choppy fashion inside 1.7041-1.7073 for rest of the New York session.
The Markit U.K. construction purchasing managers’ index rose to 62.6 in June from 60.0 in May, the highest reading since February. The consensus forecast had been for a decline to 59.5.
In other news, Federal Reserve Chair Janet Yellen said on Wednesday, 'monetary policy not best tool to promote financial stability, macroprudential regulation needs to play primary role; may be times monetary policy should adjust to address financial stability risks, clear communication needed on how risks impact policy stance; united states faces no pressing financial stability concerns at present, leaving monetary policy free to focus on inflation and unemployment; increased risk-taking in corporate bonds, leveraged lending could cause future problems, needs monitoring' efforts to make financial system more resilient critical to overall stability; higher interest rates in the early 2000s would not have prevented the crisis, or addressed systemic risks in the economy; crisis might have been avoided with policies that limited leverage, short-term funding and forced stronger underwriting; united states has made considerable progress in making banks more resilient, but still needs to tighten use of short-term funding.'
Data to be released on Thursday:
China NBS non-manufacturing PMI, HSBC service PMI, Australia building approvals, retails sales, Japan service PMI, France Markit/ABACI service PMI, Fracne Markit service PMI, Germany Markit service PMI, euro zone Markit service PMI, retails sales, ECB rate decision, U.K. Markit/CIPS service PMI, Canada trade balance, exports, imports, U.S. non-farm payrolls, unemployment rate, jobless claims, average earnings, trade balance, Markit service PMI, ISM non-manufacturing PMI.
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