Market Review - 02/05/2013 22:48GMT
Euro tumbles on negative rate speculation
The single currency tumbled against the greenback on Thursday after ECB President Mario Draghi hinted the central bank is ready to apply negative deposit rates and highlighted downside risks to the eurozone economy.
ECB's Draghi in his press conference at Bratislava said 'rate decision was consensual; very strong pervading consensus for 25 BPS; asked if rates could be cut further, says we look at all data; when asked about negative deposit rates says are technically ready; negative rates have unintended consequences, will cope if decide to act.'
The single currency remained under pressure in Asia and edged lower to 1.3148 in early European morning before recovering to 1.3181 ahead of ECB's rate decision. Despite a brief but sharp fall to 1.3115 after ECB cut its interest rate by 25 bps to 0.50%, price rose to session high at 1.3220 on short-covering. However, euro pared intra-day gains and tanked after ECB's Draghi hinted at prospects of negative interest rates, eventually falling to an intra-day low at 1.3037 in New York morning before stabilising.
Versus the Japanese yen, although the greenback traded in choppy fashion in Asia and Europe, dollar jumped at New York open and rose to an intra-day high at 98.40 after the release of better-than-expected U.S. jobless claims and trade balance. However, price pared intra-day gains and retreated swiftly to 97.61 in New York morning before stabilising around 98.00 in New York afternoon.
U.S. initial jobless claims came in at 324K, better than the expectation of 345K. Trade balance was reported at -38.8 billion dollars vs forecast of -42.0 billion.
Although the British pound traded sideways in Asia and edged higher to session high at 1.5591 ahead of New York open, cable retreated in tandem with euro to an intra-day low at 1.5497 in New York morning. However, price pared intra-day losses and recovered to 1.5539 in New York afternoon.
In other news, BOJ Governor Haruhiko Kuroda said 'Japan monetary easing needed to escape deflation; will monitor if Japan easing affects emerging nations; not seeking asset bubble much in Asia due to inflows; Japan economy moving within expectations after easing; effects of BOJ April easing will come out from now.'
On the data front, U.K. construction PMI in Apir come out at 49.4, better than the street forecast of 48.0, just shy of the 50.0 growth/ expansionary mark. EU manufacturing PMI in Apr came in at 46.7, better than the expectation of 46.5. German manufacturing PMI in Apr is released at 48.1, better than the forecast of 47.9.
Data to be released on Friday:
Japan market holiday, China non-manufacturing PMI, Australia PPI, UK services PMI, EU PPI, U.S. non-farm payrolls, private payrolls, unemployment rate, avg. hourly earnings, factory orders, durable goods, ex. defense, ex. transport and ISM non-manufacturing.
Euro tumbles on negative rate speculation
The single currency tumbled against the greenback on Thursday after ECB President Mario Draghi hinted the central bank is ready to apply negative deposit rates and highlighted downside risks to the eurozone economy.
ECB's Draghi in his press conference at Bratislava said 'rate decision was consensual; very strong pervading consensus for 25 BPS; asked if rates could be cut further, says we look at all data; when asked about negative deposit rates says are technically ready; negative rates have unintended consequences, will cope if decide to act.'
The single currency remained under pressure in Asia and edged lower to 1.3148 in early European morning before recovering to 1.3181 ahead of ECB's rate decision. Despite a brief but sharp fall to 1.3115 after ECB cut its interest rate by 25 bps to 0.50%, price rose to session high at 1.3220 on short-covering. However, euro pared intra-day gains and tanked after ECB's Draghi hinted at prospects of negative interest rates, eventually falling to an intra-day low at 1.3037 in New York morning before stabilising.
Versus the Japanese yen, although the greenback traded in choppy fashion in Asia and Europe, dollar jumped at New York open and rose to an intra-day high at 98.40 after the release of better-than-expected U.S. jobless claims and trade balance. However, price pared intra-day gains and retreated swiftly to 97.61 in New York morning before stabilising around 98.00 in New York afternoon.
U.S. initial jobless claims came in at 324K, better than the expectation of 345K. Trade balance was reported at -38.8 billion dollars vs forecast of -42.0 billion.
Although the British pound traded sideways in Asia and edged higher to session high at 1.5591 ahead of New York open, cable retreated in tandem with euro to an intra-day low at 1.5497 in New York morning. However, price pared intra-day losses and recovered to 1.5539 in New York afternoon.
In other news, BOJ Governor Haruhiko Kuroda said 'Japan monetary easing needed to escape deflation; will monitor if Japan easing affects emerging nations; not seeking asset bubble much in Asia due to inflows; Japan economy moving within expectations after easing; effects of BOJ April easing will come out from now.'
On the data front, U.K. construction PMI in Apir come out at 49.4, better than the street forecast of 48.0, just shy of the 50.0 growth/ expansionary mark. EU manufacturing PMI in Apr came in at 46.7, better than the expectation of 46.5. German manufacturing PMI in Apr is released at 48.1, better than the forecast of 47.9.
Data to be released on Friday:
Japan market holiday, China non-manufacturing PMI, Australia PPI, UK services PMI, EU PPI, U.S. non-farm payrolls, private payrolls, unemployment rate, avg. hourly earnings, factory orders, durable goods, ex. defense, ex. transport and ISM non-manufacturing.
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