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Market Review - 04/03/2009 22:31 GMT
Euro rallies as news of the Chinese stimulus plan boosts global equities
The euro rallied against the yen and dollar on Wednesday as risk appetite returned following reports that China's latest stimulus package would increase spending on infrastructure and manufacturing. The news gave a boost to stock markets across the globe despite the weaker-than-expected Australian GDP and U.S. ADP employment data.
In addition, traders shrugged off the bearish comments in the Fed's Beige Book, which said that economic conditions got even worse in January and February and that the U.S. economy is not expected to pick up before late 2009 or early 2010. The Dow pared intra-day gains and ended the day 149 points higher. The ADP employment report showed a loss of 697,000 jobs in February compared to the consensus forecast of a 610,000 decline, while the ISM (non-manufacturing) index weakened by less than expected in February to 41.6, but stayed well below the 50 level (the threshold which determines whether the economy is contracting or expanding).
Data released earlier in the day showed that Australian GDP shrank by 0.5% in the fourth quarter of 2008, with economists expecting a rise of 0.2%. The aussie hit an intra-day low of 0.6285 before rallying to 0.6527 in line with the greenback's weakness against most of the major currencies.
Euro rose strongly from its Asian session low at 1.2457 to 1.2663 versus the dollar and from 122.40 to 125.65 against the yen as traders sought out higher-yielding investments. The British pound strengthened to an intra-day high of 1.4199 having traded as low as 1.3985 in Asia.
The dollar traded above the 99.00 level versus the yen for the first time since November on active cross selling in yen due to the diminished safe have value of the Japanese currency.
Thursday will see the release of Australian trade balance, German retail sales, eurozone GDP and U.S. weekly jobless claims. The Bank of England and European Central Bank are both expected to cut interest rates by 50 basis points to 0.50% and 1.50% respectively.
Euro rallies as news of the Chinese stimulus plan boosts global equities
The euro rallied against the yen and dollar on Wednesday as risk appetite returned following reports that China's latest stimulus package would increase spending on infrastructure and manufacturing. The news gave a boost to stock markets across the globe despite the weaker-than-expected Australian GDP and U.S. ADP employment data.
In addition, traders shrugged off the bearish comments in the Fed's Beige Book, which said that economic conditions got even worse in January and February and that the U.S. economy is not expected to pick up before late 2009 or early 2010. The Dow pared intra-day gains and ended the day 149 points higher. The ADP employment report showed a loss of 697,000 jobs in February compared to the consensus forecast of a 610,000 decline, while the ISM (non-manufacturing) index weakened by less than expected in February to 41.6, but stayed well below the 50 level (the threshold which determines whether the economy is contracting or expanding).
Data released earlier in the day showed that Australian GDP shrank by 0.5% in the fourth quarter of 2008, with economists expecting a rise of 0.2%. The aussie hit an intra-day low of 0.6285 before rallying to 0.6527 in line with the greenback's weakness against most of the major currencies.
Euro rose strongly from its Asian session low at 1.2457 to 1.2663 versus the dollar and from 122.40 to 125.65 against the yen as traders sought out higher-yielding investments. The British pound strengthened to an intra-day high of 1.4199 having traded as low as 1.3985 in Asia.
The dollar traded above the 99.00 level versus the yen for the first time since November on active cross selling in yen due to the diminished safe have value of the Japanese currency.
Thursday will see the release of Australian trade balance, German retail sales, eurozone GDP and U.S. weekly jobless claims. The Bank of England and European Central Bank are both expected to cut interest rates by 50 basis points to 0.50% and 1.50% respectively.
