Market Review - 26/03/2015 22:53GMT
Dollar rallies broadly after upbeat U.S. data and Fed comments
U.S. dollar rebounded broadly against major currencies after hawkish comments from Fed's officials. St. Louis Fed President James Bullard and Atlanta Fed President Dennis Lockhart said U.S. monetary policy might need to be adjusted in light of the economy's steady improvement since the 2007-2009 financial crisis.
Lockhart said the challenge now is to sort out whether recent weakness in exports, manufacturing and capital investment indicate the start of an economic slowdown or other temporary factors such as the soaring value of the U.S. dollar. Lockhart said he is confident for now that the weakness is "transitory," and still regards it as highly likely that the Fed will raise rates at either its June, July or September meetings.
The single currency rose briefly to 1.1052 in European morning after the release of better-than-expected GfK consumer sentiment data, however, selling interest quickly emerged below previous resistance at 1.1062 (last week's post-FOMC peak at 1.1062). Euro later tumbled in New York morning on dollar's broad-based strength after hawkish comments from Fed's Lockhart. The pair nose-dived to as low as 1.0857 before recovering.
European Central Bank President Mario Draghi reiterated on Thursday that the bank cannot buy Greek sovereign bonds as part of its quantitative easing bond-buying programme to help the euro zone economy. Draghi said the other reasons for not buying Greek bonds were that their credit rating was too low and that the ECB could not buy bonds from a country above a certain percentage - to avoid "arriving at a point where it becomes a country's biggest creditor".
ECB President Mario Draghi said on Thursday that the European Central Bank favours Italy's efforts to help its banks reduce the billions of euros of bad loans that are holding back lending and creating an obstacle to economic recovery. Draghi said there needed to be a rapid solution to the problem of impaired loans in the euro zone overall.
The greenback penetrated Tuesday's low at 119.22 in Asia and then tumbled to an intra-day low of 118.33 due to the selloff in global stock markets, however, U.S. dollar rebounded strongely to 119.43 in New York after hawkish comments from Fed's officials. The British pound rose briefly to 1.4995 before tumbling to 1.4807 on dollar's strength elsewhere.
In other news, SNB bank board member Fritz Zurbruegg said on Thursday that Switzerland's currency is still significantly overvalued and the Swiss National Bank is prepared to intervene in the foreign exchange market if necessary. The SNB said in its annual report it spent 25.8 billion Swiss francs ($26.9 billion) on defending the cap late last year, having made no interventions during 2013.
Friday will see the release of Japan's household spending, CPI, unemployment rate and retail sales and U.K. GfK consumer confidence.
Dollar rallies broadly after upbeat U.S. data and Fed comments
U.S. dollar rebounded broadly against major currencies after hawkish comments from Fed's officials. St. Louis Fed President James Bullard and Atlanta Fed President Dennis Lockhart said U.S. monetary policy might need to be adjusted in light of the economy's steady improvement since the 2007-2009 financial crisis.
Lockhart said the challenge now is to sort out whether recent weakness in exports, manufacturing and capital investment indicate the start of an economic slowdown or other temporary factors such as the soaring value of the U.S. dollar. Lockhart said he is confident for now that the weakness is "transitory," and still regards it as highly likely that the Fed will raise rates at either its June, July or September meetings.
The single currency rose briefly to 1.1052 in European morning after the release of better-than-expected GfK consumer sentiment data, however, selling interest quickly emerged below previous resistance at 1.1062 (last week's post-FOMC peak at 1.1062). Euro later tumbled in New York morning on dollar's broad-based strength after hawkish comments from Fed's Lockhart. The pair nose-dived to as low as 1.0857 before recovering.
European Central Bank President Mario Draghi reiterated on Thursday that the bank cannot buy Greek sovereign bonds as part of its quantitative easing bond-buying programme to help the euro zone economy. Draghi said the other reasons for not buying Greek bonds were that their credit rating was too low and that the ECB could not buy bonds from a country above a certain percentage - to avoid "arriving at a point where it becomes a country's biggest creditor".
ECB President Mario Draghi said on Thursday that the European Central Bank favours Italy's efforts to help its banks reduce the billions of euros of bad loans that are holding back lending and creating an obstacle to economic recovery. Draghi said there needed to be a rapid solution to the problem of impaired loans in the euro zone overall.
The greenback penetrated Tuesday's low at 119.22 in Asia and then tumbled to an intra-day low of 118.33 due to the selloff in global stock markets, however, U.S. dollar rebounded strongely to 119.43 in New York after hawkish comments from Fed's officials. The British pound rose briefly to 1.4995 before tumbling to 1.4807 on dollar's strength elsewhere.
In other news, SNB bank board member Fritz Zurbruegg said on Thursday that Switzerland's currency is still significantly overvalued and the Swiss National Bank is prepared to intervene in the foreign exchange market if necessary. The SNB said in its annual report it spent 25.8 billion Swiss francs ($26.9 billion) on defending the cap late last year, having made no interventions during 2013.
Friday will see the release of Japan's household spending, CPI, unemployment rate and retail sales and U.K. GfK consumer confidence.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.