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Wed, Sep 16 2009, 00:26 GMT

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 Market Review - 15/09/2009 20:31 All times in GMT   Euro rises to fresh 2009 high as strong U.S. retail data boosts recovery hopes

The single currency rose to another fresh 2009 high on Tuesday as strong U.S. retail data boosted risk appetite and encouraged investors to buy risky assets. Federal Reserve Chairman Ben Bernanke said a U.S. 'shadow banking system' that let banks package loans into securities is likely to be smaller and simpler when the current crisis eases.  
  
U.S. retail sales in August came out at an increase of 2.7% monthly and 1.1% yearly, beating the forecasts of 2.0% and 0.4% respectively. The British pound tumbled as BOE governor Mervyn King's comments on bank reserve deposit rate were interpreted as dovish.  
  
Euro weakened in European morning after the ZEW index in both Germany and Eurozone came out worse than expected (57.7 versus forecast of 60.0 in Germany and 59.6 versus forecast of 60.0 in Eurozone), price briefly dipped to as low as 1.4561 after the release of U.S. retail data as traders considered the robust data to be dollar-positive. However, the single currency staged strong rebound from there in tandem with the Dow and crude oil on renewed buying in risky assets and rose to another fresh 2009 high at 1.4686 before easing.  
  
Cable edged higher in Asia amid thin trading volume but price fell sharply after Mervyn King said that he does not want ‘reserves to be unnecessarily high’ and is ‘looking at lowering the rate it pays banks to deposit money with the central bank. As a reduction would be considered as a form of monetary easing, sterling fell from 1.6661 to as low as 1.6403 before recovering in New York afternoon.  
  
Japan Finance Minister Kaoru Yosano said that rising yen would have a big impact on exporters’ earnings and sudden currency moves are undesirable. Price rebounded strongly to 91.65 on strong U.S. data but retreated sharply from there as rising equities diminished the safe-haven appeal of the greenback.  
  
Economic data to be released on Wednesday include:  
Westpac economic index in Australia; retail sales and ZEW index in Switzerland; ILO unemployment rate and claimant count in U.K.; HICP in Eurozone; CPI, current account, real earnings foreign, treasury buys, industrial production and capacity utilisation in U.S.;  

Published on  Wed, Sep 16 2009, 00:28 GMT