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Market Review - 19/03/2009 21:58 GMT
The greenback falls for the second consecutive day on Fed’s Treasury plans
The U.S. dollar declined sharply for the second straight session on Thursday after the Fed announced earlier on Wednesday to purchase long-dated Treasuries over the next six months and step up its buying of mortgage bonds, which would expand the Fed’s balance sheet by as much as $1.5 trillion. Investors feared the plan would end up debasing the reserve currency and continued to sell the greenback across the board.
The single currency rallied above 1.3700 level and touched a session high of 1.3739 against the greenback on Thursday while cable also surged to as high as 1.4598 before easing. In late New York trading, euro and sterling were up by 1.2 percent and 1.3 percent to trade at 1.3666 and 1.4505 respectively versus the dollar. The greenback also weakened to as low as 93.55 versus Japanese yen and 1.1158 against the Swiss franc respectively before profit-taking emerged on risk aversion due to the fall in U.S. stock markets. U.S. dollar was down by 1.4 percent at 94.53 and 1.6 percent at 1.1235 respectively against the yen and Swiss franc in late New York session.
The dollar index, which measures the greenback against a basket of six major currencies, slipped by 1.3 percent after a 3 percent plunge on Wednesday, its biggest one-day drop in about a quarter of a century, last traded at 88.123.
U.S. stock markets fell on Thursday on concerns that the Fed’s efforts to stem recession are too costly and untested, prompting investors to book profits on bank shares after a recent run-up. The Dow Jones industrial average fell 85.78 points and ended at 7,400 while Standard & Poor’s 500 index and Nasdaq Composite Index dropped by 1.3 percent to 784 and 0.52 percent to 1,483 respectively.
The Bank of England has already started buying government bonds to unlock trading in frozen credit markets and stimulate the economy while Bank of Japan is making subordinated loans to banks. The Swiss National bank is also selling franc to weaken its currency versus euro.
Markets in Japan will be closed for a holiday on Friday. Economic data release from other nations includes German producer prices, eurozone current account and industrial production and Canadian retail sales. ECB Governing Council member Axel Weber will give a speech regarding the financial crisis at a conference of the Hertie School of Governance at 13:00GMT.
The greenback falls for the second consecutive day on Fed’s Treasury plans
The U.S. dollar declined sharply for the second straight session on Thursday after the Fed announced earlier on Wednesday to purchase long-dated Treasuries over the next six months and step up its buying of mortgage bonds, which would expand the Fed’s balance sheet by as much as $1.5 trillion. Investors feared the plan would end up debasing the reserve currency and continued to sell the greenback across the board.
The single currency rallied above 1.3700 level and touched a session high of 1.3739 against the greenback on Thursday while cable also surged to as high as 1.4598 before easing. In late New York trading, euro and sterling were up by 1.2 percent and 1.3 percent to trade at 1.3666 and 1.4505 respectively versus the dollar. The greenback also weakened to as low as 93.55 versus Japanese yen and 1.1158 against the Swiss franc respectively before profit-taking emerged on risk aversion due to the fall in U.S. stock markets. U.S. dollar was down by 1.4 percent at 94.53 and 1.6 percent at 1.1235 respectively against the yen and Swiss franc in late New York session.
The dollar index, which measures the greenback against a basket of six major currencies, slipped by 1.3 percent after a 3 percent plunge on Wednesday, its biggest one-day drop in about a quarter of a century, last traded at 88.123.
U.S. stock markets fell on Thursday on concerns that the Fed’s efforts to stem recession are too costly and untested, prompting investors to book profits on bank shares after a recent run-up. The Dow Jones industrial average fell 85.78 points and ended at 7,400 while Standard & Poor’s 500 index and Nasdaq Composite Index dropped by 1.3 percent to 784 and 0.52 percent to 1,483 respectively.
The Bank of England has already started buying government bonds to unlock trading in frozen credit markets and stimulate the economy while Bank of Japan is making subordinated loans to banks. The Swiss National bank is also selling franc to weaken its currency versus euro.
Markets in Japan will be closed for a holiday on Friday. Economic data release from other nations includes German producer prices, eurozone current account and industrial production and Canadian retail sales. ECB Governing Council member Axel Weber will give a speech regarding the financial crisis at a conference of the Hertie School of Governance at 13:00GMT.
