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Market Review - 18/02/2009 22:20 GMT
Dollar rises versus Japanese yen to 93.96 on Obama's plan to stabilise the U.S. housing market
The greenback rallied to a 6-week high of 93.96 against the Japanese yen and strengthened to a 3-month high versus the euro on Wednesday after U.S. President Barack Obama released a $275 billion housing program to stem U.S. home foreclosures. The Obama plan would help as many as 9 million homeowners refinance conforming loans owned or guaranteed by Fannie Mae and Freddie Mac. The Treasury Department will buy up to $200 billion of preferred stock in each of the housing companies, twice as much as previously pledged.
On the data front, U.S. new housing starts and permits dropped by 16.8% and 4.8% respectively to record lows of 0.47 million and 0.52 million in January. U.S. industrial production weakened by 1.8% in January versus the downwardly-revised 2.4% drop in December.
The Fed said most FOMC participants judged that a longer-run PCE inflation rate of 2% would be consistent with the dual mandate; others indicated that 1.5%-1.75% would be appropriate. Federal Reserve policy makers lowered their projections for economic growth this year, with most seeing a contraction of 0.5% to 1.3%. The U.S. economy contracted last quarter at a 3.8% annual pace, the most since 1982. Fed Chairman Ben Bernanke said the long-run projections will help prevent inflation or deflation expectations getting out of control.
The single currency remained under pressure and weakened to 1.2513 on Wednesday as Moody's Investors Service warned earlier this week that it may cut the ratings of several banks with units in Eastern Europe. The ICE’s Dollar Index rose to 88.254 on Wednesday, the highest level since Nov. 21. The greenback rose against the Swiss franc to a 3-month high of 1.1827 before retreating in late U.S. session.
The British pound weakened initially to 1.4092 ahead of the release of the minutes from the Bank of England's February meeting which showed officials had voted unanimously to seek government consent to buy gilts and other securities, however, sterling was able to rebound from there on short-covering to end the day at 1.4215.
Thursday will see the release of U.K. PSNCR, U.S. jobless claims, PPI, leading indicators and the Philadelphia Fed survey.
Dollar rises versus Japanese yen to 93.96 on Obama's plan to stabilise the U.S. housing market
The greenback rallied to a 6-week high of 93.96 against the Japanese yen and strengthened to a 3-month high versus the euro on Wednesday after U.S. President Barack Obama released a $275 billion housing program to stem U.S. home foreclosures. The Obama plan would help as many as 9 million homeowners refinance conforming loans owned or guaranteed by Fannie Mae and Freddie Mac. The Treasury Department will buy up to $200 billion of preferred stock in each of the housing companies, twice as much as previously pledged.
On the data front, U.S. new housing starts and permits dropped by 16.8% and 4.8% respectively to record lows of 0.47 million and 0.52 million in January. U.S. industrial production weakened by 1.8% in January versus the downwardly-revised 2.4% drop in December.
The Fed said most FOMC participants judged that a longer-run PCE inflation rate of 2% would be consistent with the dual mandate; others indicated that 1.5%-1.75% would be appropriate. Federal Reserve policy makers lowered their projections for economic growth this year, with most seeing a contraction of 0.5% to 1.3%. The U.S. economy contracted last quarter at a 3.8% annual pace, the most since 1982. Fed Chairman Ben Bernanke said the long-run projections will help prevent inflation or deflation expectations getting out of control.
The single currency remained under pressure and weakened to 1.2513 on Wednesday as Moody's Investors Service warned earlier this week that it may cut the ratings of several banks with units in Eastern Europe. The ICE’s Dollar Index rose to 88.254 on Wednesday, the highest level since Nov. 21. The greenback rose against the Swiss franc to a 3-month high of 1.1827 before retreating in late U.S. session.
The British pound weakened initially to 1.4092 ahead of the release of the minutes from the Bank of England's February meeting which showed officials had voted unanimously to seek government consent to buy gilts and other securities, however, sterling was able to rebound from there on short-covering to end the day at 1.4215.
Thursday will see the release of U.K. PSNCR, U.S. jobless claims, PPI, leading indicators and the Philadelphia Fed survey.
