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Market Review - 02/01/2009 22:57 GMT
Dollar rises to 3-week high versus the Japanese yen on the rally in global stock markets
The greenback rose to a 3-week high of 92.41 against the Japanese yen on the first trading day of 2009 due to the rally in stock markets together with an increase in Treasury yields from near record lows, prompting investors to buy dollar-denominated assets.
The Standard & Poor’s 500 Index increased by 28.13 points or 3.13% to close at 931.56 while the Dow Jones industrial average rose 257.82 points or 2.94% to finish at 9034.21. The Nasdaq Composite Index rallied by 55.18 points or 3.50% to end at 1632.21. Ten-year note yields rose 0.19 percentage point to 2.40 percent. The yield was 1.24 percentage points higher than Japanese government securities of comparable maturity, the widest gap since December 10.
The single currency fell to a two-week low of 1.3840 against the dollar after a European manufacturing report indicated the recession in the eurozone is deepening. The eurozone PMI manufacturing declined to 32.7, the lowest in the survey's 11-year history, adding to speculation of further interest rate cuts by the ECB. The yield advantage of two-year German bunds over similar-maturity Treasuries narrowed to 0.97 percentage point from 1.09 percentage points two weeks ago, reducing demand for euro-denominated assets.
The British pound tumbled to 1.4375 on Friday, just above a 7-year low made earlier this week at 1.4350, due to a slide in U.K. mortgage approvals in November to the weakest level since at least 1999. A separate Bank of England survey showed credit conditions looked set to tighten further in the next three months while house prices also fell by a bigger-than-expected 2.2% in December. The figures added to speculation that the Bank of England will cut key interest rates by at least 50 basis points next week from the current 2.00%.
An industry report showed factory activity in the U.S. fell by more than expected to a 28-year low in December. The U.S. ISM manufacturing came in at 32.4 versus the forecast of 35.5.
Next week will see the release of U.K. construction PMI and U.S. construction spending on Monday; German, eurozone and U.K. services PMI respectively, eurozone HICP, U.S. durable goods, factory index and ISM non-manufacturing on Tuesday; German unemployment rate, eurozone PPI and U.S. ADP employment on Wednesday; German trade balance, eurozone GDP and unemployment rate, German industrial production and factory orders and U.S. jobless claims on Thursday; Japan’s leading indicators, U.K. industrial and manufacturing production, U.K. PPI, eurozone retail sales, U.S. non-farm payrolls, unemployment rate and wholesale inventories on Friday.
Dollar rises to 3-week high versus the Japanese yen on the rally in global stock markets
The greenback rose to a 3-week high of 92.41 against the Japanese yen on the first trading day of 2009 due to the rally in stock markets together with an increase in Treasury yields from near record lows, prompting investors to buy dollar-denominated assets.
The Standard & Poor’s 500 Index increased by 28.13 points or 3.13% to close at 931.56 while the Dow Jones industrial average rose 257.82 points or 2.94% to finish at 9034.21. The Nasdaq Composite Index rallied by 55.18 points or 3.50% to end at 1632.21. Ten-year note yields rose 0.19 percentage point to 2.40 percent. The yield was 1.24 percentage points higher than Japanese government securities of comparable maturity, the widest gap since December 10.
The single currency fell to a two-week low of 1.3840 against the dollar after a European manufacturing report indicated the recession in the eurozone is deepening. The eurozone PMI manufacturing declined to 32.7, the lowest in the survey's 11-year history, adding to speculation of further interest rate cuts by the ECB. The yield advantage of two-year German bunds over similar-maturity Treasuries narrowed to 0.97 percentage point from 1.09 percentage points two weeks ago, reducing demand for euro-denominated assets.
The British pound tumbled to 1.4375 on Friday, just above a 7-year low made earlier this week at 1.4350, due to a slide in U.K. mortgage approvals in November to the weakest level since at least 1999. A separate Bank of England survey showed credit conditions looked set to tighten further in the next three months while house prices also fell by a bigger-than-expected 2.2% in December. The figures added to speculation that the Bank of England will cut key interest rates by at least 50 basis points next week from the current 2.00%.
An industry report showed factory activity in the U.S. fell by more than expected to a 28-year low in December. The U.S. ISM manufacturing came in at 32.4 versus the forecast of 35.5.
Next week will see the release of U.K. construction PMI and U.S. construction spending on Monday; German, eurozone and U.K. services PMI respectively, eurozone HICP, U.S. durable goods, factory index and ISM non-manufacturing on Tuesday; German unemployment rate, eurozone PPI and U.S. ADP employment on Wednesday; German trade balance, eurozone GDP and unemployment rate, German industrial production and factory orders and U.S. jobless claims on Thursday; Japan’s leading indicators, U.K. industrial and manufacturing production, U.K. PPI, eurozone retail sales, U.S. non-farm payrolls, unemployment rate and wholesale inventories on Friday.
