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Daily Market Outlook

Wed, Aug 20 2008, 06:17 GMT
by AceTrader Team

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Market Review -  20/08/2008 21:27 GMT

The greenback rises on Wednesday after two-day decline

The greenback strengthened against a basket of currencies on Wednesday, snapping a two-day losing streak, supported by perceptions that slowing global economic growth would prompt a wave of interest rate cuts outside the United States. The dollar clung to gains in quiet trade despite a rebound in crude oil prices and the dollar index came within striking distance of its 2008 highs touched on Tuesday.  
  
The ICE Futures U.S. dollar index, which measures the dollar's value against a basket of six currencies, rose to a session high of 77.24, near its highest level this year at 77.413. It was last up more than 0.2 percent to 76.929. Crude oil prices rebounded for a second day and the price for September delivery climbed to as high as $117.03 per barrel before easing and closed up $0.45 to $115.65.  
  
Early in the day, data showed that Japan's all-industries index, which covers a broad range of economic activity including the tertiary activity index, fell 0.9 percent in June from the previous month. The dollar rose to an intra-day high of 110.28 against the Japanese yen but gains were eroded as U.S. crude futures reversed early losses in choppy trade and worries over the health of the country's financial sector lingered (Fannie Mae and Freddie Mac may need a government bailout). The dollar dropped to 109.72 yen on the back of the initial fall in U.S. stock markets but recovered later to 110.09 yen as the Dow Jones index recouped its early losses and closed up 68.88 points to 11,417.43.  
  
Data from eurozone and the U.K. are increasingly pointing to a deterioration in the growth outlook for those regions, leading investors to anticipate early rate cuts from both the European Central Bank and the Bank of England. The single currency dropped to an intra-day low of 1.4672 versus the dollar, close to its six-month low around 1.4630 hit on Tuesday but recovered later in U.S. session due to rising crude oil prices. It was last down 0.3 percent at 1.4747. The British pound also fell against the dollar as minutes of the Bank of England's August meeting indicated British inflation risks may have ‘eased a little’ while the outlook for the economy worsened. The cable dropped to a session low of 1.8540 b4 recovering and was last trading at 1.8622 at New York closing.  
  
Economic data releases on Thursday include Japan trade data, Switzerland PPI, trade balance and ZEW index, Germany and eurozone manufacturing PMI and service PMI, U.K. retail sales, Canada CPI, U.S. weekly jobless claims, leading indicators and Philadelphia Fed survey.

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Published on  Thu, Aug 21 2008, 00:17 GMT


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