Yen retreats from 6-week high after Kuroda denied helicopter money: July 22, 2016

Market Review - 21/07/2016  22:16GMT

Yen retreats from 6-week high after Kuroda denied helicopter money

The Japanese yen rallied across the board in European session on Thursday after Bank of Japan Governor Haruhiko Kuroda said the central bank saw no need to stimulate the economy with helicopter money.

Earlier in the day, although the greenback edged up to session high at 107.49 in Asian morning, price pared its gains and tumbled sharply to an intra-day low at 105.42 in European morning following comments from Kuroda. However, dollar staged a short-covering rebound to 106.49 in New York morning before retreating again.

BoJ's Kuroda said 'no need n no possibility, of using helicopter money; don't think there's any significant limitation on further easing of monetary conditions.'

Although the single currency retreated from 1.1047 at European open to 1.1005 in European morning, price rose to session high at 1.1060 at New York open on comments from ECB President Mario Draghi. However, euro swiftly paired its gains and rumbled to an intra-day low at 1.0980 in New York morning before recovering.

ECB left its rates unchanged at 0.00% and ECB's Draghi said 'market stress was contained; recovery will be ongoing; given prevailing uncertainties, council will monitor market developments; over coming months, when more info available, will be in better position to reasses econ conditions; ready to act if necessary by using all instruments in its mandate; growth supported by domestic demand; data point to ongoing growth in Q2; Q2 growth will be at lower rate than Q1; expect recovery to proceed at moderate pace; fiscal stance in euro zone expected to be mildly expansionary in 2016, neutral in 2017, 2018; risk to growth outlook tilted to the downside; inflation rates are likely to remain very low in coming months.'

Although the British pound rose briefly to session high at 1.3275 in Australia, price tumbled to an intra-day low at 1.3157 in European morning on the back of poor UK retail sales data. However, cable pared its losses and rebounded to 1.3240 in New York morning on cross-selling of sterling vs euro.

In a report, U.K. Office for National Statistics said that retail sales dropped 0.9% in June, compared to the prior 0.9% gain. Analysts had expected retail sales to fall 0.6% last month.

Year-on-year, retail sales increased 4.3%, compared to May’s 5.7% gain which was revised from the initial reading of a 6.0% gain. Consensus had forecast a 5.0% rise.

Data to be released on Friday:

Japan Nikkei manufacturing PMI, France Markit manufacturing PMI, Markit service PMI, Germany Markit manufacturing PMI, Markit service PMI, Italy industrial order, industrial sales, retail sales, trade balance, Eurozone Markit manufacturing PMI, Markit service PMI, Canada CPI, retail sales and U.S. Markit manufacturing PMI.