Yen rebounds from 4-month low vs dollar and euros ends flat
The single currency ended the day little changed against the greenback on Friday after falling to a 2-week low in Europe and later rebounded in New York after strong U.S. GDP and comments by the IMF triggered short-covering.
Although the single currency edged higher to session high at 1.2956 in Asian morning, renewed selling quickly pushed price to 1.2916 at European open. Euro rebounded briefly but sharply to 1.2951 in European morning, however, failure to penetrate previous high pushed the pair lower and price tumbled to an intra-day low at 1.2883 as a selloff in European bourses and Dow Jones futures after Spain posted record high unemployment triggered broad-based risk aversion of broad-based dollar and yen buying. Later, the single currency trimmed intra-day losses and rebounded at New York open on short-covering due partly to the release of better-than-expected U.S. GDP and price briefly spiked to 1.2955 in New York morning after comments from the IMF before retreating to 1.2923 at New York midday.
IMF said 'important progress made in reforming Spanish financial sector; all deadlines established with European authorities have been met; financial market conditions have improved.'
On the data front, Spain's unemployment rate rose to 25.02%, from 24.6% in the previous quarter. U.S. GDP in Q3 expanded by 2.0%, better than economists' forecast of 1.8%.
Versus the Japanese yen, although the greenback rose to a fresh 4-month high at 80.37 in Australia, price quickly came under selling pressure at Tokyo open and tumbled to 79.71 in European morning on broad-based buying of the Japanese currency. Dollar briefly recovered to 79.98 at New York open after the release of U.S. GDP, however, renewed selling interest pushed price down to session low at 79.49 in New York morning. Price pared intra-day losses and rebounded to 79.74 before retreating again in New York afternoon.
The British pound traded sideways in Asian and European session before spiking in tandem with euro to session high at 1.6141 in New York morning. However, price pared intra-day gains and retreated to session low at 1.6081 at New York midday before stabilising.
In other news, European Commission and ECB team said 'Spain on track to correct problems with its banking sector, Spanish "bad bank" to be operational from Dec 1.' ECB's Executive Board member Peter Praet added 'monetary policy can alleviate deleveraging pressures in times of crisis but cannot solve underlying problems; wider policy response needed to address root causes in deleveraging pressures.'
Data to be released next week :
Japan retail sales, UK housing survey, mortgage approvals, Germany HICP, CPI, retail sales, U.S. personal spending, personal income, personal consumption, PCE index and core PCE on Monday.
Japan household spending, industrial production, unemployment rate, BoJ rate decision, Germany unemployment rate, EU business climate, economic sentiment, consumer sentiment, UK CBI distributive trades, Canada PPI, U.S. redbook retail sales, home price and consumer confidence on Tuesday.
UK Gfk consumer confidence, Australia building approvals, Japan construction orders, EU unemployment rate, Canada GDP and Chicago PMI on Wednesday.
UK nationwide house prices manufacturing PMI, Swiss retail sales, U.S. jobless claims, productivity, labour cost, manufacturing PMI, construction spending and ISM manufacturing on Thursday.
EU Italy manufacturing PMI, France manufacturing PMI, Germany manufacturing PMI, U.S. non-farm payrolls, private payrolls, average hourly earnings, unemployment rate, durable goods (rev.), ex. defense (rev.), ex. transport (rev.), factory orders and Canada unemployment on Friday.