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Market Review - 05/02/2009 22:25 GMT
Dollar rallies to a one-month high of 92.25 versus the Japanese yen as U.S. equities stabilise
The greenback rallied to a one-month high of 92.25 against the Japanese yen on Thursday after Republican and Democratic senators said they had agreed the U.S. economic stimulus package should be close to the $800 billion sought by President Barack Obama, reducing demand for the Japanese currency as a haven from financial turmoil. Investors are expecting U.S. regulators will change an accounting rule governing assets held by banks which may limit the losses of financial firms.
In other news, Bank of Japan’s policy member Mizuno said downside risks for Japan are very high and the economy is facing a potentially hard landing. The single currency and sterling rallied against the Japanese unit from 114.35 to 118.91 and from 128.52 to 135.58 respectively. Australian dollar also strengthened versus the Japanese yen from 57.20 to 60.68.
The European Central Bank left interest rates unchanged at 2% as widely expected, however, ECB President Jean-Claude Trichet signaled that the central bank may resume its monetary easing cycle in March. He said that zero interest rates were not something the bank considered
‘appropriate’. The yield on the three-month Euribor interest rate futures contract due in March fell to 1.76%, down from 1.84% a week ago. The single currency rebounded briefly from 1.2760 to around 1.2892 in U.S. morning on cross buying in euro versus the Japanese yen before falling later in the day.
The British pound rose to a two-week high of 1.4703 on speculation that the Bank of England will pause in cutting borrowing costs after it reduced its benchmark rate by 50 basis points as expected to a record low of 1% on Thursday in order to stimulate growth, as well as the release of better-than-expected U.K. Halifax house prices which rose by 1.9% versus the forecast of a drop of 1.6%. The single currency tumbled versus the sterling from 0.8930 to 0.8733.
Friday will see the release of Japan’s leading indicators, U.K. industrial production, manufacturing production and PPI, German industrial production and the important U.S. non-farm payrolls and unemployment rate. Non-farm payrolls are forecast to fall by 525,000 with the unemployment rate expected to rise to 7.5% from 7.2%.
Dollar rallies to a one-month high of 92.25 versus the Japanese yen as U.S. equities stabilise
The greenback rallied to a one-month high of 92.25 against the Japanese yen on Thursday after Republican and Democratic senators said they had agreed the U.S. economic stimulus package should be close to the $800 billion sought by President Barack Obama, reducing demand for the Japanese currency as a haven from financial turmoil. Investors are expecting U.S. regulators will change an accounting rule governing assets held by banks which may limit the losses of financial firms.
In other news, Bank of Japan’s policy member Mizuno said downside risks for Japan are very high and the economy is facing a potentially hard landing. The single currency and sterling rallied against the Japanese unit from 114.35 to 118.91 and from 128.52 to 135.58 respectively. Australian dollar also strengthened versus the Japanese yen from 57.20 to 60.68.
The European Central Bank left interest rates unchanged at 2% as widely expected, however, ECB President Jean-Claude Trichet signaled that the central bank may resume its monetary easing cycle in March. He said that zero interest rates were not something the bank considered
‘appropriate’. The yield on the three-month Euribor interest rate futures contract due in March fell to 1.76%, down from 1.84% a week ago. The single currency rebounded briefly from 1.2760 to around 1.2892 in U.S. morning on cross buying in euro versus the Japanese yen before falling later in the day.
The British pound rose to a two-week high of 1.4703 on speculation that the Bank of England will pause in cutting borrowing costs after it reduced its benchmark rate by 50 basis points as expected to a record low of 1% on Thursday in order to stimulate growth, as well as the release of better-than-expected U.K. Halifax house prices which rose by 1.9% versus the forecast of a drop of 1.6%. The single currency tumbled versus the sterling from 0.8930 to 0.8733.
Friday will see the release of Japan’s leading indicators, U.K. industrial production, manufacturing production and PPI, German industrial production and the important U.S. non-farm payrolls and unemployment rate. Non-farm payrolls are forecast to fall by 525,000 with the unemployment rate expected to rise to 7.5% from 7.2%.
