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Market Review - 02/03/2009 22:14 GMT
Dollar strengthens on the back of the decline in global stocks as AIG receives another bailout
The dollar rose versus the euro and sterling on Monday as investors continued to buy the greenback as a safe haven currency with stock markets across the globe falling mainly on the news that insurance giant AIG reported a record loss in the fourth quarter of 2008 and received an additional $30 billion of U.S. Government funds.
Stocks in Europe fell after European Union leaders rejected Hungary's proposal of a 180 billion euro loan to troubled Eastern European economies, while HSBC's announcement of a plan to raise 12.5 billion pounds in a rights offer also increased concerns over financial institutions, following last week's news that up to 36% of Citigroup's common stock would be held by the U.S. Government.
Euro declined to an intra-day low of 1.2545 and 121.97 versus the dollar and Japanese yen respectively while the British pound weakened below the 1.4000 level against the greenback for the first time since late January. Sterling hit a session low of 1.3958 and 0.9010 against the dollar and euro respectively before recovering to 1.4052 and 0.8948 on short-covering.
Data out of Europe and the U.K. highlighted the worsening economic situation outside of the U.S. with German, European and U.K. manufacturing PMI all coming in below expectations. Although the release of better-than-expected U.S. personal income and spending data later in the day gave a brief boost to the euro, the single currency fell again as U.S equity markets hit new multi-year lows with the Dow falling below the 7000 level to end the day down 299 points at 6763.
Australia will release retail sales data at 00:30GMT and the Reserve Bank of Australia is expected to cut interest rates by 25 basis points to 3.00% at 03:30GMT. The Bank of Canada's rate decision is due out 14:00GMT (the central bank is forecast to lower rates to 0.50% from 1.00%). U.S. pending home sales will be released at 15:00GMT.
Dollar strengthens on the back of the decline in global stocks as AIG receives another bailout
The dollar rose versus the euro and sterling on Monday as investors continued to buy the greenback as a safe haven currency with stock markets across the globe falling mainly on the news that insurance giant AIG reported a record loss in the fourth quarter of 2008 and received an additional $30 billion of U.S. Government funds.
Stocks in Europe fell after European Union leaders rejected Hungary's proposal of a 180 billion euro loan to troubled Eastern European economies, while HSBC's announcement of a plan to raise 12.5 billion pounds in a rights offer also increased concerns over financial institutions, following last week's news that up to 36% of Citigroup's common stock would be held by the U.S. Government.
Euro declined to an intra-day low of 1.2545 and 121.97 versus the dollar and Japanese yen respectively while the British pound weakened below the 1.4000 level against the greenback for the first time since late January. Sterling hit a session low of 1.3958 and 0.9010 against the dollar and euro respectively before recovering to 1.4052 and 0.8948 on short-covering.
Data out of Europe and the U.K. highlighted the worsening economic situation outside of the U.S. with German, European and U.K. manufacturing PMI all coming in below expectations. Although the release of better-than-expected U.S. personal income and spending data later in the day gave a brief boost to the euro, the single currency fell again as U.S equity markets hit new multi-year lows with the Dow falling below the 7000 level to end the day down 299 points at 6763.
Australia will release retail sales data at 00:30GMT and the Reserve Bank of Australia is expected to cut interest rates by 25 basis points to 3.00% at 03:30GMT. The Bank of Canada's rate decision is due out 14:00GMT (the central bank is forecast to lower rates to 0.50% from 1.00%). U.S. pending home sales will be released at 15:00GMT.
