Market Review - 25/11/2014 22:59GMT
U.S. dollar falls broadly on weaker-than-expected U.S. consumer confidence
The greenback swung wildly on Monday after the release of BoJ minutes and mixed U.S. economic data. Despite dollar's brief rise above Monday's New York high at 118.48 to 118.57 ahead of Asian open n release of BoJ meeting minutes, price quickly retreated as the minutes showed 4 out of the 9 BoJ board members were opposed to conducting additional easy policy because they were worried about the side-effects after expanding an aggressive easing program. U.S. dollar tumbled to 117.80 after comments from BoJ's Governor Kuroda before recovering. The pair jumped to 118.30 after the release of robust U.S. GDP data which came in at 3.9% versus economists' forecast of 3.3%, however, the pair fell again after the release of much weaker-than-expected U.S. consumer confidence data which came in at 85.7 in November versus economists' expectation of 96.0 and downwardly revised reading of 94.1 in October.
BoJ Governor Kuroda said 'will carefully watch market moves, including FX, and their impact on economy; weak yen is positive for exports but weighs on household incomes, smaller firms' earnings through rising import costs; important for japan to maintain market trust in its fiscal policy by laying out roadmap for medium-, long-term fiscal reform; efforts to restore Japan's fiscal health very important for Japan to achieve sustainable economic growth; Japan megabanks have sharply reduced JGB holdings, while regional banks haven't shifted fund allocations that much yet.'
BoJ's Nakaso said 'decision to expand QE intended to show strong commitment to achieving price target; BoJ buying JGBs flexibly to compress the entire yield curve; decline in consumer spending, housing investment after April sales tax hike has been protracted; upward pressure on prices will increase as demand rises and output gap narrows; decline in real interest rates will stimulus capex, consumer spending and housing investment.'
The Organisation for Economic Cooperation and Development (OECD) said Japan needs a credible plan to reduce its debt to contain the risk that the Bank of Japan's quantitative easing could cause inflation expectations to spike.
Despite euro's brief drop to 1.2403 in NY morning on Tuesday after the release of robust U.S. GDP data, the single currency subsequently rebounded on dollar's broad-based weakness after the release of much weaker-than-expected U.S. consumer confidence. Euro rose to as high as 1.2486 before easing in late New York.
German FinMin Wolfgang Schaeuble said on Tuesday that Europe's biggest economy was not in recession. Schaeuble said that Germany has invested heavily in research in development and that it doesn't make sense to only count investment in tangible infrastructure.
Bundesbank Vice President Claudia Buch said in a statement on the publication of a report on financial stability that "the longer the phase of low interest rates continues, the greater the danger of excess in certain segments of the market."
Despite cable's brief drop to 1.5649 in European morning on Tuesday, the British pound jumped to as high as 1.5736 on dollar's broad-based weakness after the release of much weaker-than-expected U.S. consumer confidence before retreating in late New York.
Bank of England's Cunliffe said "more worried about risk of inflation surprising again on the downside than unexpected emergence of inflationary pressure; productivity growth of 2 pct would leave room for further pay growth before costs grow at pace consistent with inflation target."
Bank of England's Carney said "relative strength of UK economy is driving immigration from Europe; MPC discussions have been about pace and timing of tightening, not further easing; MPC has considerable flexibility to provide extra stimulus were it to become necessary; bias is not to provide additional marginal unconventional stimulus."
Wednesday will see the release of German import prices U.S. GDP and CBI distributive trades, U.S. core PCE, durables, personal income, Chicago PMI, University of Michigan sentiment, new home sales, pending homes sales change and building permits.
U.S. dollar falls broadly on weaker-than-expected U.S. consumer confidence
The greenback swung wildly on Monday after the release of BoJ minutes and mixed U.S. economic data. Despite dollar's brief rise above Monday's New York high at 118.48 to 118.57 ahead of Asian open n release of BoJ meeting minutes, price quickly retreated as the minutes showed 4 out of the 9 BoJ board members were opposed to conducting additional easy policy because they were worried about the side-effects after expanding an aggressive easing program. U.S. dollar tumbled to 117.80 after comments from BoJ's Governor Kuroda before recovering. The pair jumped to 118.30 after the release of robust U.S. GDP data which came in at 3.9% versus economists' forecast of 3.3%, however, the pair fell again after the release of much weaker-than-expected U.S. consumer confidence data which came in at 85.7 in November versus economists' expectation of 96.0 and downwardly revised reading of 94.1 in October.
BoJ Governor Kuroda said 'will carefully watch market moves, including FX, and their impact on economy; weak yen is positive for exports but weighs on household incomes, smaller firms' earnings through rising import costs; important for japan to maintain market trust in its fiscal policy by laying out roadmap for medium-, long-term fiscal reform; efforts to restore Japan's fiscal health very important for Japan to achieve sustainable economic growth; Japan megabanks have sharply reduced JGB holdings, while regional banks haven't shifted fund allocations that much yet.'
BoJ's Nakaso said 'decision to expand QE intended to show strong commitment to achieving price target; BoJ buying JGBs flexibly to compress the entire yield curve; decline in consumer spending, housing investment after April sales tax hike has been protracted; upward pressure on prices will increase as demand rises and output gap narrows; decline in real interest rates will stimulus capex, consumer spending and housing investment.'
The Organisation for Economic Cooperation and Development (OECD) said Japan needs a credible plan to reduce its debt to contain the risk that the Bank of Japan's quantitative easing could cause inflation expectations to spike.
Despite euro's brief drop to 1.2403 in NY morning on Tuesday after the release of robust U.S. GDP data, the single currency subsequently rebounded on dollar's broad-based weakness after the release of much weaker-than-expected U.S. consumer confidence. Euro rose to as high as 1.2486 before easing in late New York.
German FinMin Wolfgang Schaeuble said on Tuesday that Europe's biggest economy was not in recession. Schaeuble said that Germany has invested heavily in research in development and that it doesn't make sense to only count investment in tangible infrastructure.
Bundesbank Vice President Claudia Buch said in a statement on the publication of a report on financial stability that "the longer the phase of low interest rates continues, the greater the danger of excess in certain segments of the market."
Despite cable's brief drop to 1.5649 in European morning on Tuesday, the British pound jumped to as high as 1.5736 on dollar's broad-based weakness after the release of much weaker-than-expected U.S. consumer confidence before retreating in late New York.
Bank of England's Cunliffe said "more worried about risk of inflation surprising again on the downside than unexpected emergence of inflationary pressure; productivity growth of 2 pct would leave room for further pay growth before costs grow at pace consistent with inflation target."
Bank of England's Carney said "relative strength of UK economy is driving immigration from Europe; MPC discussions have been about pace and timing of tightening, not further easing; MPC has considerable flexibility to provide extra stimulus were it to become necessary; bias is not to provide additional marginal unconventional stimulus."
Wednesday will see the release of German import prices U.S. GDP and CBI distributive trades, U.S. core PCE, durables, personal income, Chicago PMI, University of Michigan sentiment, new home sales, pending homes sales change and building permits.
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