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Market Review - 12/11/2007 18:00 GMT
Dollar rises sharply on profit taking
The dollar rallied on Monday as concerns over the write-downs and losses due to the credit market crisis led traders to take profits on short dollar positions accumulated recently on the expectation that the Federal Reserve would cut interest rates. Increased risk aversion also caused significant unwinding in yen carry trades, which made the Japanese yen rise strongly against high-yielding currencies such as the Australian dollar, British pound and New Zealand dollar.
With trading volume was relatively thin in U.S. session as the U.S. Treasury debt market closed for the Veteran's Holiday, the euro tumbled to 1.4526 against the dollar after hitting record high at 1.4753 on Friday. The single currency also declined against the yen from 162.40 to 158.83. The Swiss franc weakened to 1.1300 against the dollar but moved higher against the euro to 1.6377 on cross buying.
The Japanese yen strengthened to its highest level since May 2006 versus the dollar at 109.15 before retreating on profit taking. Aud/jpy and gbp/jpy collapsed to 96.04 and 225.17 respectively. The commodity currencies, Australian, New Zealand and Canadian dollar all fell against the greenback to 0.8758, 0.7437 and 0.9705 respectively.
Although U.K. producer prices came in above market expectations, the British pound found little support due to fears that the U.K. economy will be hit hard by the global market crisis. In addition, fears of a terrorist attack when a large fire broke out at an empty warehouse near the site of the 2012 Olympics in East London led to renewed cross selling in sterling, despite police denials of any suspect terrorist activity. Cable fell from its intra-day high in Asia at 2.0925 to 2.0588 before recovering in late trading.
The Bank of Japan ends its two day policy meeting on Tuesday and is widely expected to keep interest rates unchanged at 0.5 percent. Japan GDP for the third quarter is due out at 23:50GMT and is forecast to rise by an annualised rate of 1.8% following a decline of 1.2% previously.
Other economic data to be released on Tuesday include U.K. RICS house prices, CPI and RPI, eurozone ZEW survey and industrial production, as well as the German ZEW index. No major economic data is due out of the U.S.
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Market Review - 12/11/2007 18:00 GMT
Dollar rises sharply on profit taking
The dollar rallied on Monday as concerns over the write-downs and losses due to the credit market crisis led traders to take profits on short dollar positions accumulated recently on the expectation that the Federal Reserve would cut interest rates. Increased risk aversion also caused significant unwinding in yen carry trades, which made the Japanese yen rise strongly against high-yielding currencies such as the Australian dollar, British pound and New Zealand dollar.
With trading volume was relatively thin in U.S. session as the U.S. Treasury debt market closed for the Veteran's Holiday, the euro tumbled to 1.4526 against the dollar after hitting record high at 1.4753 on Friday. The single currency also declined against the yen from 162.40 to 158.83. The Swiss franc weakened to 1.1300 against the dollar but moved higher against the euro to 1.6377 on cross buying.
The Japanese yen strengthened to its highest level since May 2006 versus the dollar at 109.15 before retreating on profit taking. Aud/jpy and gbp/jpy collapsed to 96.04 and 225.17 respectively. The commodity currencies, Australian, New Zealand and Canadian dollar all fell against the greenback to 0.8758, 0.7437 and 0.9705 respectively.
Although U.K. producer prices came in above market expectations, the British pound found little support due to fears that the U.K. economy will be hit hard by the global market crisis. In addition, fears of a terrorist attack when a large fire broke out at an empty warehouse near the site of the 2012 Olympics in East London led to renewed cross selling in sterling, despite police denials of any suspect terrorist activity. Cable fell from its intra-day high in Asia at 2.0925 to 2.0588 before recovering in late trading.
The Bank of Japan ends its two day policy meeting on Tuesday and is widely expected to keep interest rates unchanged at 0.5 percent. Japan GDP for the third quarter is due out at 23:50GMT and is forecast to rise by an annualised rate of 1.8% following a decline of 1.2% previously.
Other economic data to be released on Tuesday include U.K. RICS house prices, CPI and RPI, eurozone ZEW survey and industrial production, as well as the German ZEW index. No major economic data is due out of the U.S.
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