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Market Review - 27/11/2007 22:01 GMT
Dollar rebounds broadly as Citigroup deal prompts rebound in global stocks
The greenback rose broadly against major currency on Tuesday after Abu Dhabi announced it will buy a $7.5 billion stake in Citigroup Inc. that will help Citigroup to expand its business and strengthen capital. The U.S. currency rallied from 107.29 to 109.16 against the Japanese yen on the back of the news together with the rally in U.S. stocks as the Dow Jones index rose by 215 points.
On the data front, U.S. consumer confidence in November fell to 87.3 (forecast was 91.4) from a downwardly-revised 95.2 reading in the previous month. The greenback briefly retreated against the Japanese yen and then rose in late New York due to dollar’s broad-based rebound on back of the rally in U.S. stocks and active cross selling in yen.
European Central Bank Governing Council member Klaus Liebscher said he would not support an interest rate cut. Liebscher said risks to inflation have increased and the growth outlook remained positive, although some slowing was expected in light of recent financial market turbulence and investor jitters. German Finance Minister Peer Steinbrueck said on Tuesday he expected the economic upturn in the eurozone's largest economy to continue in 2008 despite the strong euro.
However, ECB Governing Council member Nicholas Garganas stated that recent euro gains against the dollar have been ‘sharp and abrupt’ and such currency moves are not desirable. The single currency retreated from 1.4909 to 1.4809 against the dollar.
Federal Reserve Bank of Philadelphia President Charles Plosser said he expected economic growth to slow over the coming months, while the central bank's rate cuts increase the risk of higher inflation.
Chicago Federal Reserve Bank President Charles Evans commented that the U.S. central bank has probably cut interest rates enough to ward off the potential for surprisingly weak economic growth. Evans warned that overly accommodative policy by the Fed 'could endanger price stability' at a time when recent signs on inflation have been 'encouraging'.
Monetary Policy Committee Andrew Sentance said the Bank of England has to weigh up the impact of rising inflationary pressures against the likely economic slowdown caused by the turmoil in financial markets. Sentance said he was still worried about high oil prices, more so than in early 2006, partly because the cost of other commodities and food is shooting up. The British pound also retreated from 2.0758 to 2.0640 due to dollar’s broad-based rebound.
Wednesday will see the release of Japan’s retail sales, German Gfk index, U.S. durable goods, closely watched existing home sales data and the Fed’s Beige book.
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Market Review - 27/11/2007 22:01 GMT
Dollar rebounds broadly as Citigroup deal prompts rebound in global stocks
The greenback rose broadly against major currency on Tuesday after Abu Dhabi announced it will buy a $7.5 billion stake in Citigroup Inc. that will help Citigroup to expand its business and strengthen capital. The U.S. currency rallied from 107.29 to 109.16 against the Japanese yen on the back of the news together with the rally in U.S. stocks as the Dow Jones index rose by 215 points.
On the data front, U.S. consumer confidence in November fell to 87.3 (forecast was 91.4) from a downwardly-revised 95.2 reading in the previous month. The greenback briefly retreated against the Japanese yen and then rose in late New York due to dollar’s broad-based rebound on back of the rally in U.S. stocks and active cross selling in yen.
European Central Bank Governing Council member Klaus Liebscher said he would not support an interest rate cut. Liebscher said risks to inflation have increased and the growth outlook remained positive, although some slowing was expected in light of recent financial market turbulence and investor jitters. German Finance Minister Peer Steinbrueck said on Tuesday he expected the economic upturn in the eurozone's largest economy to continue in 2008 despite the strong euro.
However, ECB Governing Council member Nicholas Garganas stated that recent euro gains against the dollar have been ‘sharp and abrupt’ and such currency moves are not desirable. The single currency retreated from 1.4909 to 1.4809 against the dollar.
Federal Reserve Bank of Philadelphia President Charles Plosser said he expected economic growth to slow over the coming months, while the central bank's rate cuts increase the risk of higher inflation.
Chicago Federal Reserve Bank President Charles Evans commented that the U.S. central bank has probably cut interest rates enough to ward off the potential for surprisingly weak economic growth. Evans warned that overly accommodative policy by the Fed 'could endanger price stability' at a time when recent signs on inflation have been 'encouraging'.
Monetary Policy Committee Andrew Sentance said the Bank of England has to weigh up the impact of rising inflationary pressures against the likely economic slowdown caused by the turmoil in financial markets. Sentance said he was still worried about high oil prices, more so than in early 2006, partly because the cost of other commodities and food is shooting up. The British pound also retreated from 2.0758 to 2.0640 due to dollar’s broad-based rebound.
Wednesday will see the release of Japan’s retail sales, German Gfk index, U.S. durable goods, closely watched existing home sales data and the Fed’s Beige book.
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