Euro remains flat on continued stalemate in U.S. budget talks
The single currency remained flat versus th U.S. dollar after a roller-coaster session on Thursday, price retreated in volatile New York trading as fears of U.S. fiscal cliff outweighed the upbeat U.S. GDP data.
Although the single currency initially fell to a low of 1.3187 in Australia, the pair rebounded strongly in European morning due to active cross buying of euro versus sterling and then hit session high at 1.3295 in New York morning after the release of better-than-expected U.S. GDP data (3.1% versus the forecast of 2.7%), however, failure to re-test Wednesday's 8-1/2 moth peak at 1.3308 prompted profit taking and price retreated sharply to 1.3214 at New York midday before moving sideways in New York afternoon.
Versus the Japanese yen, despite dollar's brief but sharp fall to 83.95 in thin Australian session, the pair staged a recovery to 84.34 in Asian morning. Later, although the greenback rose slightly to 84.39 after the Bank of Japan announced to expand size of asset buying and lending program by 10 trillion yen to 101 trillion yen as anticipated, the pair dropped below said 83.95 to 83.86 at Asian midday before staging a strong rebound to 84.45 at New York midday due to renewed cross-selling in yen.
The Bank of Japan kept interest rate unchanged at 0.1% as expected and said 'to increase buying of t-bill discount bills, JGBs by 5 trillion yen each; will reviewed at next policy meeting its understanding on medium to long term price stability; no change to deadline for meeting target for asset buying and lending from end of next year; to begin fund supply under new lending scheme from June 2013.
The British pound edged higher from Australian low at 1.6238 in Asian morning and price rose to 1.6280 in European morning before retreating to 1.6249 in New York morning. Despite cable's brief but strong rise to an intra-day high at 1.6296 after the release of U.S. GDP data, the sharp fall in eur/usd pressured the pair to 1.6254 at New York midday before staging a recovery.
In other news, White House said 'President Obama's last offer on fiscal cliff was not necessarily his final offer but there is not much further he can do.'
Earlier, BoJ's Governor Masaaki Shirakawa said 'will debate next month if any room to review figures on desirable long-term price growth; will reach conclusion in January on review of long-term price stability; price growth must be accompanied by sustainable economic growth; fiscal discipline may loosen if Japan becomes accustomed to long period of very low rates; will not rule out easing just because of side effects, but need to ensure such side effects don't materialise.'
On the data front, U.S. weekly jobless claim came in at 361K, versus the forecast of 360K and the revised 344K in the previous week. U.K. retail sales in November came in at 0.0% m/m and 0.9% y/y, worse than the forecast of 0.3% and 1.5% respectively.
Data to be released on Friday :
Japan BoJ publishes monthly report, Germany Gfk consumer confidence, Import price index, France business climate, U.K. Current account (gbp), GfK Consumer confidence, GDP, PSNCR, Public sector net borrowing , U.S. Personal income , Personal spending, PCE index, PCE core, Chicago Fed index, Durable goods, ex. defense, ex. transport, Canada GDP, CPI, CPI core.