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Daily Market Outlook

Mon, Jun 30 2008, 07:23 GMT
by AceTrader Team

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Market Review -  27/06/2008 20:30 GMT

Dollar slides versus Japanese yen and Swiss franc as risk appetite wanes

The dollar weakened against the Japanese yen and Swiss franc on Friday as investors pared back risk exposure amid slumping prices in global stock markets, record high oil prices and worries about U.S. economic growth.  
  
Japanese yen and Swiss franc rose to three-week highs against the dollar to 105.85 and 1.0166 respectively on Friday. Meanwhile, the euro headed for its second straight week of gains against the greenback and closed near the day's high at 1.5794 as tepid U.S. economic data undermined the case for the Federal Reserve to hike interest rates by August. Sterling also strengthened and closed near the day's high of 1.9952 versus the dollar. The Canadian dollar rose to a three-week high against the U.S. dollar amid high crude oil prices and touched 1.0049 (the strongest since June 3) before easing in late New York session.  
  
On the other side, the euro dropped to session's low at 167.03 versus the Japanese yen from a record high of 169.47 touched on Thursday, and 1.6040 against the Swiss franc after Russia's central bank said it plans to increase the Swiss currency's share in its $558.7 billion gold and foreign exchange reserves.  
  
With oil prices hitting a record high of near $143 and up more than 47 percent so far this year, the combination of sluggish growth and high prices has battered U.S. stocks, sent bond yields lower and put pressure on the dollar. The Dow Jones industrial average dropped for another day and declined 106 points to 11,346.51 on Friday, and is now more than 20 percent below its October 2007 peak.   
  
Futures contracts showed that investors reduced wagers on additional rate increases by the ECB this year and implied yield on the December Euribor futures contract dropped 14 basis points, or 0.14 percentage point this week to 5.16 percent.  
  
Economic data releases next Monday include UK Gfk consumer confidence survey, Japan manufacturing PMI, housing starts and construction orders, eurozone CPI Y/Y estimate, Canada GDP data and U.S. Chicago PMI. Later in the week, data to closely watched by traders are the ECB rate decision and U.S. non-farm payrolls on Thursday (instead of the usual first Friday of each month due to U.S. Independence Day holiday on Friday).

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Published on  Mon, Jun 30 2008, 07:50 GMT


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