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Market Review - 11/03/2009 22:33 GMT
Dollar falls across the board on long liquidation; Reserve Bank of New Zealand cuts interest rates to record low of 3%
The U.S. dollar declined on Wednesday as increasing speculation that the worst of the banking crisis may be over, led to liquidation of some of the long dollar positions accumulated recently (investors switched funds from riskier assets to the greenback, which was treated as a safe-haven vehicle). The absence of fresh negative news about the global economic slump also spurred traders to buy the euro, sterling and Australian dollar, while the yen rose in part due to repatriation purposes.
In other news, the New Zealand dollar strengthened after the Reserve Bank of New Zealand cut interest rates by 50 basis points to a record low of 3%. Although the central bank that the global recession was putting pressure on the New Zealand economy, traders were encouraged to buy the kiwi after rumours of a 100 or 150 basis point cut proved to be false. Kiwi rose from its Asian low at 0.4978 to as high as 0.5138.
The euro's rally to 1.2865 versus the dollar was also partly due to firmer equities, with most stock markets around the world making small gains after Tuesday's rebound. The Swiss franc and Japanese yen rose to 1.1521 and 97.02 respectively versus the greenback. Although cable hit another multi-week low at 1.3655 against the dollar yesterday, sterling was able to rebound strongly in Europe and U.S. session on short-covering and price reached a high of 1.3889 in New York afternoon before easing.
Japan GDP data is due out at 23:50GMT (late Wednesday) with economists expecting an annualised fall of 12.7% for the fourth quarter of 2008. Australian employment data will be released at 00:30GMT while eurozone PPI and German industrial production come out at 10:00GMT and 11:00GMT respectively. The Swiss National Bank will announce its interest rate decision at 13:00GMT and is forecast to cut rates by 25 basis points to 0.25%.
Data out of the U.S. includes weekly jobless claims and retail sales. Economists forecast a 0.4% drop in sales in February following a rise of 1.0% in the previous month. Jobless claims are likely to increase slightly to 640,000.
Dollar falls across the board on long liquidation; Reserve Bank of New Zealand cuts interest rates to record low of 3%
The U.S. dollar declined on Wednesday as increasing speculation that the worst of the banking crisis may be over, led to liquidation of some of the long dollar positions accumulated recently (investors switched funds from riskier assets to the greenback, which was treated as a safe-haven vehicle). The absence of fresh negative news about the global economic slump also spurred traders to buy the euro, sterling and Australian dollar, while the yen rose in part due to repatriation purposes.
In other news, the New Zealand dollar strengthened after the Reserve Bank of New Zealand cut interest rates by 50 basis points to a record low of 3%. Although the central bank that the global recession was putting pressure on the New Zealand economy, traders were encouraged to buy the kiwi after rumours of a 100 or 150 basis point cut proved to be false. Kiwi rose from its Asian low at 0.4978 to as high as 0.5138.
The euro's rally to 1.2865 versus the dollar was also partly due to firmer equities, with most stock markets around the world making small gains after Tuesday's rebound. The Swiss franc and Japanese yen rose to 1.1521 and 97.02 respectively versus the greenback. Although cable hit another multi-week low at 1.3655 against the dollar yesterday, sterling was able to rebound strongly in Europe and U.S. session on short-covering and price reached a high of 1.3889 in New York afternoon before easing.
Japan GDP data is due out at 23:50GMT (late Wednesday) with economists expecting an annualised fall of 12.7% for the fourth quarter of 2008. Australian employment data will be released at 00:30GMT while eurozone PPI and German industrial production come out at 10:00GMT and 11:00GMT respectively. The Swiss National Bank will announce its interest rate decision at 13:00GMT and is forecast to cut rates by 25 basis points to 0.25%.
Data out of the U.S. includes weekly jobless claims and retail sales. Economists forecast a 0.4% drop in sales in February following a rise of 1.0% in the previous month. Jobless claims are likely to increase slightly to 640,000.
