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Daily Market Outlook

Fri, Oct 23 2009, 06:25 GMT

AceTrader

  Market Review - 22/10/2009 22:08      All times in GMT  
Dollar hovers near 14-month low against euro on rally in U.S. stocks

The dollar traded near a 14-month low on Thursday despite recovering earlier in the day on profit taking. Although U.S. jobless claims data came out worse than expected at 531,000 compared to 520,000 in the prior week, the rebound in U.S. financial stocks and upbeat earnings reports from a number of Dow components pushed the Dow back above 10,000 in New York afternoon, DJI closed up 131 points, denting the dollar's safe-haven appeal. Earlier, the U.S. currency rose against the Japanese yen and usd/jpy hit a one-month high of 91.72 in NY morning before easing.  
 
In European morning, euro ratcheted lower to 1.4943 versus the greenback on long liquidation after China GDP data released earlier in the day did not provide any surprises (the 8.9% figure matched economists' expectations but there were rumours of a reading of 9.0% or higher). Euro then rebounded and traded narrowly in New York morning, however, the rally in Wall Street boosted risk appetite and revived demand for higher-yielding assets. The single currency advanced to as high as 1.5040 (few pips below Wednesday's 14-month peak of 1.5047). Australian and New Zealand dollar also rebounded strongly against the greenback to 0.9280 and 0.7598 respectively in late U.S. afternoon after falling in Asian & European sessions.   
 
The British pound dipped versus the dollar after failing to penetrate the one-month high of 1.6638 in Asia. Cable then tumbled to 1.6487 after the release of much weaker-than-expected U.K. retail sales data. U.K. retail sales was unchanged in September compared to economists' consensus forecast of 0.5% increase. However, buying interest on dips lifted sterling to as high as 1.6633 in late U.S. session. Furthermore, Bank of England Deputy Governor Pail Tucker said it may be difficult to gauge the strength of Britain's economy recovery for some time to come.   
 
Data to be released on Friday include Australian export and import data, German and eurozone service and manufacturing PMI, German Ifo index, eurozone industrial orders, U.K GDP and U.S. existing home sales. Fed's Bernanke will speak on regulation at 12:30GMT.

Published on  Fri, Oct 23 2009, 07:03 GMT