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Market Review - 05/11/2008 22:13 GMT
Dollar drops versus Japanese yen on weak U.S. service industries and company job losses
The greenback fell against the Japanese yen from 99.93 to 97.88 on Wednesday due to a contraction in the U.S. service industry and company job losses, adding to speculation that the Federal Reserve will cut interest rate by 50 basis points next month.
The Institute for Supply Management's non-manufacturing index dropped in October to 44.4, the lowest level since records began in 1997 and well below the reading of 50.2 in September. A reading of 50 is the dividing line between growth and contraction. U.S. ADP employment showed an estimated 157,000 jobs were cut in October (well below the expectation of a 100,000 reduction), the most in almost six years, following a downwardly-revised 26,000 decrease in September.
Interest-rate futures showed an 81% chance that the Fed will cut the 1 percent target rate for overnight lending between banks by another half-percentage point at its December 16 meeting, compared with 55% odds on Tuesday.
The single currency rose initially against the dollar to 1.3117 after the release of weak U.S. economic data, however, active unwinding of carry trades together with the fall in crude oil prices pressured euro to around 1.2906 in late U.S. session. Euro also retreated versus the Japanese yen from 130.13 to 126.84 on the back of the selloff in U.S. stock markets.
Dow Jones industrial index fell by 486 points or 5.05% to end at 9139. The Standard & Poor’s 500 index dropped by 52.98 points or 5.27% to close at 952.77. The Nasdaq Composite index was down 98.48 points or 5.53% at 1681.64. President-elect Barack Obama has advocated a second fiscal stimulus package to help boost the economy, increasing the proposed cost of his ‘middle-class rescue plan’ to $175 billion from $115 billion.
The U.S. currency rose against the Canadian dollar from 1.1465 to 1.1690 as crude oil futures tumbled by more than $5 to end at $66.15 per barrel, the steepest drop in more than three weeks.
Thursday will see the release of Japan’s leading indicators, German factory orders, U.S. jobless claims, labour cost and productivity. Investors are also focusing on the rate decisions by Bank of England and European Central Bank, with the central banks widely expected to cut interest rates by 50 basis points to 4.00% and 3.25% respectively.
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AceTrader M-T-D Intra-Day performance summary (as of 5 Nov)
USD/JPY -42 | EUR/USD +33 | USD/CHF +44 | GBP/USD +115 |
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Dollar drops versus Japanese yen on weak U.S. service industries and company job losses
The greenback fell against the Japanese yen from 99.93 to 97.88 on Wednesday due to a contraction in the U.S. service industry and company job losses, adding to speculation that the Federal Reserve will cut interest rate by 50 basis points next month.
The Institute for Supply Management's non-manufacturing index dropped in October to 44.4, the lowest level since records began in 1997 and well below the reading of 50.2 in September. A reading of 50 is the dividing line between growth and contraction. U.S. ADP employment showed an estimated 157,000 jobs were cut in October (well below the expectation of a 100,000 reduction), the most in almost six years, following a downwardly-revised 26,000 decrease in September.
Interest-rate futures showed an 81% chance that the Fed will cut the 1 percent target rate for overnight lending between banks by another half-percentage point at its December 16 meeting, compared with 55% odds on Tuesday.
The single currency rose initially against the dollar to 1.3117 after the release of weak U.S. economic data, however, active unwinding of carry trades together with the fall in crude oil prices pressured euro to around 1.2906 in late U.S. session. Euro also retreated versus the Japanese yen from 130.13 to 126.84 on the back of the selloff in U.S. stock markets.
Dow Jones industrial index fell by 486 points or 5.05% to end at 9139. The Standard & Poor’s 500 index dropped by 52.98 points or 5.27% to close at 952.77. The Nasdaq Composite index was down 98.48 points or 5.53% at 1681.64. President-elect Barack Obama has advocated a second fiscal stimulus package to help boost the economy, increasing the proposed cost of his ‘middle-class rescue plan’ to $175 billion from $115 billion.
The U.S. currency rose against the Canadian dollar from 1.1465 to 1.1690 as crude oil futures tumbled by more than $5 to end at $66.15 per barrel, the steepest drop in more than three weeks.
Thursday will see the release of Japan’s leading indicators, German factory orders, U.S. jobless claims, labour cost and productivity. Investors are also focusing on the rate decisions by Bank of England and European Central Bank, with the central banks widely expected to cut interest rates by 50 basis points to 4.00% and 3.25% respectively.
***********************************************************************************
AceTrader M-T-D Intra-Day performance summary (as of 5 Nov)
USD/JPY -42 | EUR/USD +33 | USD/CHF +44 | GBP/USD +115 |
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