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Market Review - 31/03/2009 21:43 GMT
Japanese yen falls to three-week low against the dollar on active cross selling
The greenback rallied against the Japanese yen to a more than three-week high at 99.37 on Tuesday and made its largest quarterly gain since 2001 on the back of rise in the global stock markets and also after Japan’s Prime Minister Taro Aso said Japan, the world’s second-largest economy, is still in a crisis.
On Monday, the Japanese yen rose against the dollar due to the fiscal year-end but the weak economic data released on Tuesday morning (Japan unemployment rate rose to 4.4% in February and housing starts decreased by 24.9%) curbed further buying of yen. Eur/jpy rallied from 128.27 to 131.88 on speculation that European assets would maintain their yield advantage over those in Japan. Gpb/jpy also surged from 138.60 to as high as 142.52.
The dollar declined against European currencies as the gain in stocks (DJI ended the day up 86.90 or 1.16%) led to the tentative return of risk appetite and reduced demand for safe-haven investments such as the greenback. The single currency rose from 1.3175 to 1.3343 before retreated on profit-taking as investors awaited the ECB’s rate decision on Thursday. The ECB is widely expected to cut rates to 1.00% and the central bank may state that further rate cuts are needed. The British pound also strengthened against the dollar from 1.4240 to 1.4377 before easing in late New York session.
Economic data to be released on Wednesday include Japan Tankan big manufacturing and Tankan capex, German retail sales, Swiss PMI, Germany, eurozone, and U.K PMI manufacturing. Eurozone unemployment rate is likely to increase to 8.3%. U.S. ADP employment data is due out at 12:15GMT (with economists expecting a loss of around 660,000 jobs) while U.S. ISM manufacturing index is forecast to tick higher to 36.0 from 35.8 in the previous month.
Japanese yen falls to three-week low against the dollar on active cross selling
The greenback rallied against the Japanese yen to a more than three-week high at 99.37 on Tuesday and made its largest quarterly gain since 2001 on the back of rise in the global stock markets and also after Japan’s Prime Minister Taro Aso said Japan, the world’s second-largest economy, is still in a crisis.
On Monday, the Japanese yen rose against the dollar due to the fiscal year-end but the weak economic data released on Tuesday morning (Japan unemployment rate rose to 4.4% in February and housing starts decreased by 24.9%) curbed further buying of yen. Eur/jpy rallied from 128.27 to 131.88 on speculation that European assets would maintain their yield advantage over those in Japan. Gpb/jpy also surged from 138.60 to as high as 142.52.
The dollar declined against European currencies as the gain in stocks (DJI ended the day up 86.90 or 1.16%) led to the tentative return of risk appetite and reduced demand for safe-haven investments such as the greenback. The single currency rose from 1.3175 to 1.3343 before retreated on profit-taking as investors awaited the ECB’s rate decision on Thursday. The ECB is widely expected to cut rates to 1.00% and the central bank may state that further rate cuts are needed. The British pound also strengthened against the dollar from 1.4240 to 1.4377 before easing in late New York session.
Economic data to be released on Wednesday include Japan Tankan big manufacturing and Tankan capex, German retail sales, Swiss PMI, Germany, eurozone, and U.K PMI manufacturing. Eurozone unemployment rate is likely to increase to 8.3%. U.S. ADP employment data is due out at 12:15GMT (with economists expecting a loss of around 660,000 jobs) while U.S. ISM manufacturing index is forecast to tick higher to 36.0 from 35.8 in the previous month.
