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Market Review - 04/02/2009 22:29 GMT
Euro tumbles on news of the downgrade of Russia’s sovereign credit ratings
The single currency fell sharply against the Japanese yen and U.S. dollar on Wednesday after Fitch Ratings downgraded Russia's sovereign credit ratings to 'BBB' and said more cuts were possible due to low commodity prices, dwindling reserves and corporate debt problems, adding to speculation that the slump in Eastern Europe will cause the eurozone economic slowdown to deepen. The euro also came under pressure as crude oil prices fell briefly below $40.00 per barrel after government data showed U.S. crude oil stocks increased by more than expected, a sign that demand was still slowing.
The U.S. currency rose broadly against major currencies on falling stock prices (the Dow Jones industrial average fell by 121.70 points to close at 7,956.66) and concerns over possible delays in the government's stimulus package. In the first Senate vote on amending President Barack Obama’s $885 billion plan, the Democrats fell two votes short of the 60 needed to proceed on a proposal to add $25 billion in spending on highways, mass-transit programs and water projects.
On the data front, the Institute for Supply Management’s index of non-manufacturing businesses index rose to 42.9 from 40.1 in December, much higher than the expectation of 39.0. The figure indicated the U.S. services sector was not contracting as quickly as economists had estimated.
The greenback rose against the Swiss franc from 1.1408 to 1.1635 and traded inside 88.83-89.79 range versus the Japanese yen due to active cross trading. The benchmark 10-year U.S. Treasury note fell 11/32 in price to yield 2.93% while the 2-year U.S. Treasury note fell 1/32 in price to yield 0.98%.
The British pound rose from 1.4323 to 1.4580 while the single currency tumbled against the sterling from 0.9077 to 0.8843 as the U.K. services industry contracted in January at a slower pace than forecast. The Chartered Institute of Purchasing and Supply index for the services industry was 42.5 in January, compared with 40.2 in the previous month.
Thursday will see the release of German factory orders, U.S. jobless claims, productivity, revised durable goods and factory orders. The European Central Bank is widely expected to leave interest rates unchanged at 2.0% on Thursday as ECB President Jean-Claude Trichet reiterated last week that the next ‘important’ meeting for policy makers will be in March. However, the Bank of England is expected to cut rates by 50 basis points to a fresh record low of 1.0% from 1.5%.
Euro tumbles on news of the downgrade of Russia’s sovereign credit ratings
The single currency fell sharply against the Japanese yen and U.S. dollar on Wednesday after Fitch Ratings downgraded Russia's sovereign credit ratings to 'BBB' and said more cuts were possible due to low commodity prices, dwindling reserves and corporate debt problems, adding to speculation that the slump in Eastern Europe will cause the eurozone economic slowdown to deepen. The euro also came under pressure as crude oil prices fell briefly below $40.00 per barrel after government data showed U.S. crude oil stocks increased by more than expected, a sign that demand was still slowing.
The U.S. currency rose broadly against major currencies on falling stock prices (the Dow Jones industrial average fell by 121.70 points to close at 7,956.66) and concerns over possible delays in the government's stimulus package. In the first Senate vote on amending President Barack Obama’s $885 billion plan, the Democrats fell two votes short of the 60 needed to proceed on a proposal to add $25 billion in spending on highways, mass-transit programs and water projects.
On the data front, the Institute for Supply Management’s index of non-manufacturing businesses index rose to 42.9 from 40.1 in December, much higher than the expectation of 39.0. The figure indicated the U.S. services sector was not contracting as quickly as economists had estimated.
The greenback rose against the Swiss franc from 1.1408 to 1.1635 and traded inside 88.83-89.79 range versus the Japanese yen due to active cross trading. The benchmark 10-year U.S. Treasury note fell 11/32 in price to yield 2.93% while the 2-year U.S. Treasury note fell 1/32 in price to yield 0.98%.
The British pound rose from 1.4323 to 1.4580 while the single currency tumbled against the sterling from 0.9077 to 0.8843 as the U.K. services industry contracted in January at a slower pace than forecast. The Chartered Institute of Purchasing and Supply index for the services industry was 42.5 in January, compared with 40.2 in the previous month.
Thursday will see the release of German factory orders, U.S. jobless claims, productivity, revised durable goods and factory orders. The European Central Bank is widely expected to leave interest rates unchanged at 2.0% on Thursday as ECB President Jean-Claude Trichet reiterated last week that the next ‘important’ meeting for policy makers will be in March. However, the Bank of England is expected to cut rates by 50 basis points to a fresh record low of 1.0% from 1.5%.
