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Market Review - 22/08/2008 15:50 GMTThe greenback rebounded in tandem with U.S. stocks and retreat in oil prices
Despite falling on Thursday versus other major currencies, dollar was
able to stage a strong rebound across the board on Friday due to
several factors, including weakness in oil prices, strength in U.S.
stocks and the falling British pound on concerns over U.K. economy.
Although oil prices rose over 5 percent or US$6 on Thursday, crude oil retreated sharply on Friday and dropped back to US$117 per barrel by New York noon time, partly due to a report which showed that there will be more OPEC output this month, while weekend profit-taking activities also put pressure on U.S. crude oil futures.
The rebound in U.S. stocks was another dollar-supportive factor. Wall Street stocks rose on Friday on hopes that Lehman Brothers, the fourth-largest U.S. investment bank, will attract a major investor from N.E. Asia. The shares of Lehman Brothers surged 12 percent after the Korea Development Bank said the U.S. investment bank was one of its options for an acquisition. Comments from investor Warrent Buffett gave an extra boost to DJI as he said in a television interview that he has no bets against the U.S. dollar and stocks are more attractive now than a year ago.
Remarks from Federal Reserve Chairman Ben Bernanke also helped push stock prices higher as he spoke at an annual Fed symposium in Jackson Hole, Wyoming, saying that the decline in commodity prices and a spell of weak economic growth should help slow inflation. Analysts interpreted his comments as less hawkish which lowered the chance the Fed will raise rates later this year.
Against the British pound, dollar jumped immediately after the release of weaker-than-expected U.K. Q2 GDP data, the number came in at 0.0 percent Q/Q and 1.4 percent Y/Y, is slightly lower than analysts' forecast of 0.1% Q/Q and 1.5% Y/Y, however, it was the weakest performance since the recession of the early 1990s. Cable quickly tumbled to over 1.2 percent in London session and remained under pressure throughout New York trading, falling to a 2-year low of 1.8505.
The single currency also slipped to as low as 1.4783 whilst the buck rose against the Japanese yen to 110.03 on the back of renewed carry trade activities due to rising stock prices (eur/jpy also rallied to 163.11).
U.K. market will be closed on Monday due to public holiday and economic data to be released next week include U.S. existing home sales on Monday; German Ifo index and U.S. consumer confidence plus new home sales on Tuesday; German CPI and U.S. durable goods on Wednesday; German unemployment and U.S. GDP on Thursday; Japan industrial production, U.S. PCE and Chicago PMI on Friday.
Market Review - 22/08/2008 15:50 GMT
The greenback rebounded in tandem with U.S. stocks and retreat in oil prices
Despite falling on Thursday versus other major currencies, dollar was
able to stage a strong rebound across the board on Friday due to
several factors, including weakness in oil prices, strength in U.S.
stocks and the falling British pound on concerns over U.K. economy. Although oil prices rose over 5 percent or US$6 on Thursday, crude oil retreated sharply on Friday and dropped back to US$117 per barrel by New York noon time, partly due to a report which showed that there will be more OPEC output this month, while weekend profit-taking activities also put pressure on U.S. crude oil futures.
The rebound in U.S. stocks was another dollar-supportive factor. Wall Street stocks rose on Friday on hopes that Lehman Brothers, the fourth-largest U.S. investment bank, will attract a major investor from N.E. Asia. The shares of Lehman Brothers surged 12 percent after the Korea Development Bank said the U.S. investment bank was one of its options for an acquisition. Comments from investor Warrent Buffett gave an extra boost to DJI as he said in a television interview that he has no bets against the U.S. dollar and stocks are more attractive now than a year ago.
Remarks from Federal Reserve Chairman Ben Bernanke also helped push stock prices higher as he spoke at an annual Fed symposium in Jackson Hole, Wyoming, saying that the decline in commodity prices and a spell of weak economic growth should help slow inflation. Analysts interpreted his comments as less hawkish which lowered the chance the Fed will raise rates later this year.
Against the British pound, dollar jumped immediately after the release of weaker-than-expected U.K. Q2 GDP data, the number came in at 0.0 percent Q/Q and 1.4 percent Y/Y, is slightly lower than analysts' forecast of 0.1% Q/Q and 1.5% Y/Y, however, it was the weakest performance since the recession of the early 1990s. Cable quickly tumbled to over 1.2 percent in London session and remained under pressure throughout New York trading, falling to a 2-year low of 1.8505.
The single currency also slipped to as low as 1.4783 whilst the buck rose against the Japanese yen to 110.03 on the back of renewed carry trade activities due to rising stock prices (eur/jpy also rallied to 163.11).
U.K. market will be closed on Monday due to public holiday and economic data to be released next week include U.S. existing home sales on Monday; German Ifo index and U.S. consumer confidence plus new home sales on Tuesday; German CPI and U.S. durable goods on Wednesday; German unemployment and U.S. GDP on Thursday; Japan industrial production, U.S. PCE and Chicago PMI on Friday.
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