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Daily Market Outlook
Thu, Oct 2 2008, 01:03 GMT
by AceTrader Team
AceTrader
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Market Review -
01/10/2008 21:23 GMT
U.S. dollar rallies versus euro on ECB rate cut concerns and U.S. bailout package optimism
The U.S. dollar rose versus the euro on Wednesday on the view that the
European Central Bank might have to cut interest rates as doubts mount
over the eurozone's ability to deal with the global financial crisis.
Optimism that U.S. lawmakers would eventually approve a $700 billion
plan to stabilize the domestic financial system also supported the
dollar, lifting it against major currencies. In late New York trading,
the ICE Futures U.S. dollar index, which measures the value of the
dollar against a basket of currencies, was up 0.43 percent to 79.658.
European
governments scrambled this week to shore up banks through
nationalisations and capital infusions as the financial contagion from
the U.S. subprime mortgage mess spread across the Atlantic. The ECB
meets on Thursday to decide on interest rates and there is concern
among market participants that the ECB may have to resort to an
emergency rate cut as the only type of policy response to everything
that has been going on. The single currency was under pressure for
another day on Wednesday and data showed eurozone manufacturing fell to
a near seven-year low in September (manufacturing PMI came out at 45.0
versus the forecast of 45.3 and the previous month's reading of 47.6),
while the unemployment rate rose to 7.5 percent in August from 7.4
percent the previous month also hurt the euro. The euro dropped beneath
the key 1.4000 level versus the dollar at one point, trading as low as
1.3975, and in late New York trade, the euro was down 0.6 percent at
1.4010.
In New York morning, the dollar got a boost from a
report showing U.S. private employers cut a surprisingly low 8,000 jobs
in September, according to ADP Employer Services, however, data showed
that U.S. factory activity shrank in September to its lowest since the
2001 recession pressured the dollar and it fell to a session low of
105.33 against the Japanese yen before attention reverted back to
optimism that lawmakers would vote in favor of the bailout bill.
News
that Britain's manufacturing sector shrank at a record pace in
September put pressure on sterling as it raised the chances of a Bank
of England rate cut next week. The British pound fell to a session low
of 1.7635 against the dollar before stabilising and was down 0.6
percent at 1.7700 in late New York session.
On Thursday,
economic data releases include Australia trade balance, U.K. nationwide
house price data and PMI construction, eurozone PPI and ECB rate
decision, U.S. weekly jobless claims, factory orders and revised data
for durable goods in August. ECB will hold a news conference after
announcing its interest rate decision at 12:30GMT and the majority of
economists are expecting central bank to keep rates unchanged at 4.25%.
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Published on
Thu, Oct 2 2008, 01:41 GMT
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