Market Review - 23/10/2014 22:50GMT
U.S. dollar rallies versus Japanese yen on upbeat U.S. data
The greenback rallied againt the Japanese yen to a fresh 2-week high at 108.35 on Thursday on renewed risk appetite due to the rise in global stock markets. Dow Jones index closed up by 1.32% or 217 points to 16678.
Despite dollar's brief drop to 107.11 in Asia on Thursday, the greenback rebounded in Europe on renewed risk appetite due to the rally in European equities together with U.S. and Japanese futures. U.S. dollar later rose strongly to as high as 108.35 in New York as U.S. stock markets extended intra-day gains.
On the data front, U.S. jobless claims came in at 283,000 versus economists' forecast of 282,000. U.S. Markit manufacturing PMI flash was 56.2 in October. U.S. leading indicators rose by 0.8%, higher than the expectation of 0.6% rise.
Roberto Guimaraes-Filho, deputy division chief of the Regional Studies Division at the IMF's Asia Pacific Depart. said at a seminar that Japan should go ahead with a second sales tax hike next year in order to maintain credibility of its fiscal framework; the IMF expects Japan's economy to grow by an annualized 3.4% in Jul-Sep, rebounding from the deepest slump since the 2009 global financial crisis in the previous quarter after Apr's tax hike.
The single currency remained under pressure on Thursday partly due to Wednesday's news that Reuters cited source from Spain's Efe news agency reported that at least 11 banks fm 6 European countries are set to fail the region-wide financial health check this Sun. The single currency dropped to an intra-day low of 1.2614 in European morning on Thursday. The pair staged a strong rebound to 1.2676 on short-covering but renewed selling interest knocked price lower to 1.2631 in New York morning after the release of US econ. data before rebounding.
Bank of Italy said latest data indicates Italy Q3 contracted slightly, export outlook uncertain, household, business confidence weak; high risk of prolonged period of low inflation, creating risks for Italy debt-to-GDP ratio; government decision to delay debt-cutting goal reasonable given depth of recession. Italy PM Renzi later said can find additional 1-2 billion euros to meet EU budget requirements.
EU leaders will meet in Brussels on 23/24 October. This will mark the last European Council meeting to be chaired by Herman Van Rompuy. ECB board member Yves Mersch said we are not out of the danger zone; patient is still fragile and unfortunately relapses cannot be ruled out.
The British pound met renewed selling interest at European open on Thursday and extended decline from Tue's high at 1.6186 to a low of 1.5995 low before staging a brief recovery to 1.6052 in NY.
BoE's Broadbent said 'any rises in BoE official interest rate "to be limited and gradual"; neutral real interest rates for UK economy likely to stay low "for some time yet"; UK neutral real interest rates likely to rise eventually as headwinds to growth dissipate.'
Friday will see the release of New Zealand trade balance, imports, exports, China house prices, Germany consumer sentiment, Italy retail sales, UK GDP and U.S. new home sales.
U.S. dollar rallies versus Japanese yen on upbeat U.S. data
The greenback rallied againt the Japanese yen to a fresh 2-week high at 108.35 on Thursday on renewed risk appetite due to the rise in global stock markets. Dow Jones index closed up by 1.32% or 217 points to 16678.
Despite dollar's brief drop to 107.11 in Asia on Thursday, the greenback rebounded in Europe on renewed risk appetite due to the rally in European equities together with U.S. and Japanese futures. U.S. dollar later rose strongly to as high as 108.35 in New York as U.S. stock markets extended intra-day gains.
On the data front, U.S. jobless claims came in at 283,000 versus economists' forecast of 282,000. U.S. Markit manufacturing PMI flash was 56.2 in October. U.S. leading indicators rose by 0.8%, higher than the expectation of 0.6% rise.
Roberto Guimaraes-Filho, deputy division chief of the Regional Studies Division at the IMF's Asia Pacific Depart. said at a seminar that Japan should go ahead with a second sales tax hike next year in order to maintain credibility of its fiscal framework; the IMF expects Japan's economy to grow by an annualized 3.4% in Jul-Sep, rebounding from the deepest slump since the 2009 global financial crisis in the previous quarter after Apr's tax hike.
The single currency remained under pressure on Thursday partly due to Wednesday's news that Reuters cited source from Spain's Efe news agency reported that at least 11 banks fm 6 European countries are set to fail the region-wide financial health check this Sun. The single currency dropped to an intra-day low of 1.2614 in European morning on Thursday. The pair staged a strong rebound to 1.2676 on short-covering but renewed selling interest knocked price lower to 1.2631 in New York morning after the release of US econ. data before rebounding.
Bank of Italy said latest data indicates Italy Q3 contracted slightly, export outlook uncertain, household, business confidence weak; high risk of prolonged period of low inflation, creating risks for Italy debt-to-GDP ratio; government decision to delay debt-cutting goal reasonable given depth of recession. Italy PM Renzi later said can find additional 1-2 billion euros to meet EU budget requirements.
EU leaders will meet in Brussels on 23/24 October. This will mark the last European Council meeting to be chaired by Herman Van Rompuy. ECB board member Yves Mersch said we are not out of the danger zone; patient is still fragile and unfortunately relapses cannot be ruled out.
The British pound met renewed selling interest at European open on Thursday and extended decline from Tue's high at 1.6186 to a low of 1.5995 low before staging a brief recovery to 1.6052 in NY.
BoE's Broadbent said 'any rises in BoE official interest rate "to be limited and gradual"; neutral real interest rates for UK economy likely to stay low "for some time yet"; UK neutral real interest rates likely to rise eventually as headwinds to growth dissipate.'
Friday will see the release of New Zealand trade balance, imports, exports, China house prices, Germany consumer sentiment, Italy retail sales, UK GDP and U.S. new home sales.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.