Market Review - 22/09/2014 22:41GMT
Euro falls to fresh 14-month low after dovish comments from ECB president Draghi
Despite euro's brief recovery from Asian low at 1.2826 to 1.2868 on Monday, the single currency weakened again in Europe due to dollar’s strength elsewhere due to the selloff in global stock markets and the pair later fell to a fresh 14-month low at 1.2816 in New York morning after dovish comments from ECB's president Mario Draghi but short-covering lifted the pair near New York close.
ECB's Draghi said 'will monitor closely risks to outlook for inflation; will focus in particular on possible repercussions of dampened growth dynamics, geopolitical and exchanged rate developments, pass-through of monetary policy; take-up of TLTROs was within range expected by the ECB; confident market for ABS will grow as result of ECB intervention; governing council remains fully determined to counter risks to medium-inflation outlook; ECB stands ready to using additional unconventional instruments within our mandate and alter size and/or composition of unconventional interventions if inflation remains too low for too long; structural reforms crucial to complement ECB policy; no monetary stimulus without structural reforms can ever have meaningful effect.'
Although the greenback briefly rose to 107.20 against the Japanese yen in Asian morning on Monday, U.S. dollar retreated to 108.67 due to active cross buying in Japanese yen on the decline in Nikkei-225 index and then climbed back to 109.20 in New York morning before retreating again near New York close.
Bank of Japan governor Haruhiko Kuroda said at a G20 meeting in Cairns, Australia, on Sept. 19 that he did not see any big problems with current movements in exchange rates. Kuroda said "it's important for FX rates to move in a stable manner by reflecting economic fundamentals and it's natural for it to move in accordance with changes in economic fundamentals."
New York Federal Reserve President William Dudley said at a Bloomberg News event in New York that 'the Federal Reserve will take into account the strengthening of the U.S. dollar as it considers when to back away from its aggressive easing of monetary policy; the value of the dollar is not a target for the central bank, but its rise does impact inflation and the "appropriateness of monetary policy"; he wants to leave the current, near-zero interest rate level as soon as it is appropriate.
The British pound tracked euro’s movement closely on Monday. Despite initial weakness in Asia, cable rebounded after holding above last Friday’s New York low at 1.6584 and rebounded from 1.6587 to 1.6666. The pair then retreated briefly to 1.6623 in Europe and then rising again to 1.6369 near New York close.
Tuesday will see the release of China's HSBC manufacturing PMI, German and eurozone Markit service PMI, U.K. PSNB and PSNCR, Canada's retail sales, U.S. Redbook and Markit manufacturing PMI.
Euro falls to fresh 14-month low after dovish comments from ECB president Draghi
Despite euro's brief recovery from Asian low at 1.2826 to 1.2868 on Monday, the single currency weakened again in Europe due to dollar’s strength elsewhere due to the selloff in global stock markets and the pair later fell to a fresh 14-month low at 1.2816 in New York morning after dovish comments from ECB's president Mario Draghi but short-covering lifted the pair near New York close.
ECB's Draghi said 'will monitor closely risks to outlook for inflation; will focus in particular on possible repercussions of dampened growth dynamics, geopolitical and exchanged rate developments, pass-through of monetary policy; take-up of TLTROs was within range expected by the ECB; confident market for ABS will grow as result of ECB intervention; governing council remains fully determined to counter risks to medium-inflation outlook; ECB stands ready to using additional unconventional instruments within our mandate and alter size and/or composition of unconventional interventions if inflation remains too low for too long; structural reforms crucial to complement ECB policy; no monetary stimulus without structural reforms can ever have meaningful effect.'
Although the greenback briefly rose to 107.20 against the Japanese yen in Asian morning on Monday, U.S. dollar retreated to 108.67 due to active cross buying in Japanese yen on the decline in Nikkei-225 index and then climbed back to 109.20 in New York morning before retreating again near New York close.
Bank of Japan governor Haruhiko Kuroda said at a G20 meeting in Cairns, Australia, on Sept. 19 that he did not see any big problems with current movements in exchange rates. Kuroda said "it's important for FX rates to move in a stable manner by reflecting economic fundamentals and it's natural for it to move in accordance with changes in economic fundamentals."
New York Federal Reserve President William Dudley said at a Bloomberg News event in New York that 'the Federal Reserve will take into account the strengthening of the U.S. dollar as it considers when to back away from its aggressive easing of monetary policy; the value of the dollar is not a target for the central bank, but its rise does impact inflation and the "appropriateness of monetary policy"; he wants to leave the current, near-zero interest rate level as soon as it is appropriate.
The British pound tracked euro’s movement closely on Monday. Despite initial weakness in Asia, cable rebounded after holding above last Friday’s New York low at 1.6584 and rebounded from 1.6587 to 1.6666. The pair then retreated briefly to 1.6623 in Europe and then rising again to 1.6369 near New York close.
Tuesday will see the release of China's HSBC manufacturing PMI, German and eurozone Markit service PMI, U.K. PSNB and PSNCR, Canada's retail sales, U.S. Redbook and Markit manufacturing PMI.
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