Euro rebounds from near one-week low vs dollar on short covering
The single currency fell broadly on Friday as weak data from China fuelled speculation of a global economic slowdown, however, a bout of selling vs dollar in New York lifted the single currency.
Earlier in Asia, euro ratcheted lower after data showed China's export growth collapsed, fuelling concern of a global economic slowdown and price later fell to a near one-week low at 1.2242 in New York morning. However, euro rebounded sharply to session high at 1.2316 on active short-covering before paring intra-day gains and traded near 1.2287 at New York closing.
The British pound also fell to an intra-day low at 1.5579 in European morning on risk aversion, however, cable rallied to a one-week high at 1.5702 on short covering and due partly to cross buying of sterling versus euro (eur/gbp tumbled from 0.7877 to 0.7829). Price later retreated to 1.5668 in New York afternoon before stabilising.
Versus the Japanese yen, the greenback fell 78.40 in European morning, following the release of China's data before dropping to session low at 78.16 as risk aversion prompted broad-based buying of the yen. Later, dollar pared some of its intra-day losses and recovered to 78.28 in late New York afternoon.
In other news, RBA released its quarterly monetary policy statement, which stated 'judged policy appropriate, sees very early sign of past easing coming through; revises up 2012 y/y GDP growth to 3.5% (from 3%), sees growth of 3% in both 2013 and 2014; underlying inflation seen around -2.5% by end 2013 and through 2014, carbon tax seen adding 0.25%; A$ an important risk, possible persistently high A$ "may be more contractionary" than in past; high A$ has played key part in structural adjustment process for the economy; Chinese economic growth looks to have stabilised, expected to pick up slightly in 2H on easier policy; euro area crisis remain most significant downside risk to global economic outlook.'
On the data front, China July exports y/y were reported at 1.0%, down from 11.3% previously.
U.S. July export and import price index m/m were reported at 0.5% and -0.6%, compared to forecasts of 0.0% and 0.1% respectively.
Data to be released next week :
Japan GDP, UK house prices, PPI and Germany WPI on Monday.
Germany GDP, ZEW index, current conditions, Swiss PPI, UK CPI, RPI, EU GDP, industrial production, U.S. PPI, retail sales and business inventories on Tuesday.
U.K. claimant count, MPC vote hike, vote cut, vote QE, unemployment rate, average earnings, U.S. CPI, real earnings, NY manufacturing, capacity utilisation, industrial production and NAHB housing market index on Wednesday.
U.K. retail sales, EU HICP, Swiss ZEW index, U.S. housing starts, jobless claims and Philadelphia Fed survey on Thursday.
Germany PPI, EU current account, trade balance, Canada CPI and U.S. University of Michigan consumer sentiment on Friday.