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Market Review - 03/12/2008 22:25
Euro pares intra-day losses on short-covering ahead of ECB meeting
The euro rebounded in New York afternoon session on Wednesday as traders covered early short positions ahead of an anticipated rate cut by the ECB on Thursday. The central bank is widely expected to reduce rates by 25 basis points from 3.25% to 2.75%, while the Bank of England is also forecast to cut interest rates by 100 basis points from 3.00% to 2.00%. The single currency also found support from the late rise in U.S. equities, with the Dow Jones index recouping its early losses and ending the day up 172 points.
Dollar rose earlier in European session against the euro, Swiss franc and British pound after the release of a batch of services PMI data which came in below expectations and implied that the countries were facing an economic slump comparable to the U.S. Data out of the U.S. also painted a gloomy picture, with ADP employment data showing a loss of 250,000 private-sector jobs in November and the ISM non-manufacturing index falling to 37.3 from 44.4 in the previous month. However, dollar retreated against high-yielding currencies in late trading as investors shrugged off the weak data and looked for bargains in the stock markets.
The greenback rebounded from 92.53 to 93.30 versus the yen on cross selling in the Japanese currency as investors offloaded the safe-haven yen in favour of riskier assets. However, concerns remained over the U.S. economy as government officials discussed whether to give up to $34 billion to the Big 3 automakers. Euro and sterling also bounced from intra-day lows at 116.82 and 136.38 respectively versus the yen to end the day at 118.66 and 137.90.
In other news, the Reserve Bank of New Zealand slashed interest rates by 150 basis points to 5.0% from 6.50%. The statement accompanying the rate cut said that further small rate cuts are possible and little growth is expected before mid-2009 while domestic inflation is being stubbornly high. The New Zealand dollar traded at 0.5327 versus the greenback while the Australian dollar rebounded in New York afternoon to 0.6489.
Other than the BOE and ECB rate announcements (12:00GMT and 12:45GMT respectively), data to be released on Thursday include eurozone third-quarter GDP, U.S. weekly jobless claims and factory orders.
Euro pares intra-day losses on short-covering ahead of ECB meeting
The euro rebounded in New York afternoon session on Wednesday as traders covered early short positions ahead of an anticipated rate cut by the ECB on Thursday. The central bank is widely expected to reduce rates by 25 basis points from 3.25% to 2.75%, while the Bank of England is also forecast to cut interest rates by 100 basis points from 3.00% to 2.00%. The single currency also found support from the late rise in U.S. equities, with the Dow Jones index recouping its early losses and ending the day up 172 points.
Dollar rose earlier in European session against the euro, Swiss franc and British pound after the release of a batch of services PMI data which came in below expectations and implied that the countries were facing an economic slump comparable to the U.S. Data out of the U.S. also painted a gloomy picture, with ADP employment data showing a loss of 250,000 private-sector jobs in November and the ISM non-manufacturing index falling to 37.3 from 44.4 in the previous month. However, dollar retreated against high-yielding currencies in late trading as investors shrugged off the weak data and looked for bargains in the stock markets.
The greenback rebounded from 92.53 to 93.30 versus the yen on cross selling in the Japanese currency as investors offloaded the safe-haven yen in favour of riskier assets. However, concerns remained over the U.S. economy as government officials discussed whether to give up to $34 billion to the Big 3 automakers. Euro and sterling also bounced from intra-day lows at 116.82 and 136.38 respectively versus the yen to end the day at 118.66 and 137.90.
In other news, the Reserve Bank of New Zealand slashed interest rates by 150 basis points to 5.0% from 6.50%. The statement accompanying the rate cut said that further small rate cuts are possible and little growth is expected before mid-2009 while domestic inflation is being stubbornly high. The New Zealand dollar traded at 0.5327 versus the greenback while the Australian dollar rebounded in New York afternoon to 0.6489.
Other than the BOE and ECB rate announcements (12:00GMT and 12:45GMT respectively), data to be released on Thursday include eurozone third-quarter GDP, U.S. weekly jobless claims and factory orders.
