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Market Review - 06/05/2009 21:21 GMT
The dollar edges lower against yen on rising global equity markets ahead of U.S. bank stress tests results
The greenback weakened against the yen on Wednesday as better-than-expected U.S. economic report suggested the worst of the recession’s job losses may have passed and rising global equity markets reduced the U.S. dollar's safe-haven appeal. Investors bought Japanese yen against the dollar and usd/jpy fell to as low as 97.94 in yesterday’s Asia morning before recovering to trade at around 98.35 in late New York session. In addition, traders' focus was on the results of the U.S. bank stress tests, following a Reuters news report which stated that Bank of America would need $34 billion in additional capital.
The single currency rebounded strongly from 1.3245 to 1.3375 against the dollar after release of stronger-than-expected eurozone PMI service data (43.8 in April compared to 40.9 in previous month) but pared its gains in late New York session ahead of the ECB’s policy meeting on Thursday (the central bank is expected to cut interest rates to a record low of 1 percent and may announce measures to stimulate lending and growth).
Meanwhile, sterling rose against the dollar and euro as robust economic data added signs that recession in U.K. had started to ease. The PMI service index, a U.K. gauge of services industries from banks to computing, rose to its highest since 1999 in April to 48.7 from 45.5 in March, while Nationwide Building Society’s consumer confidence gauge increased by 8 points to 50 in last month. The British pound strengthened versus the dollar, euro and yen, climbing to session highs of 1.5150, 0.8804 and 149.33 respectively before stabilising. The Bank of England also meets on Thursday and is forecast to hold its benchmark interest rate at a record low of 0.5 percent.
On the data front, Australian retail sales rose 2.2 percent in March, much better than the economists’ median forecast of a 0.5 percent gain and compared to a 2 percent drop in February. A separate report later in the day from the U.S. showed that companies in the U.S. cut an estimated 491,000 workers from payrolls in April, smaller than the consensus forecast of 650,000 and the previous month's figure was revised from 742,000 to 708,000.
Economic data releases on Thursday include Australia employment change and unemployment rate, Switzerland’s CPI, German factory orders, U.K. BOE rate decision, eurozone ECB rate decision, and U.S. weekly jobless claims, labour cost and productivity. At 13:30GMT, Federal Reserve Chairman Ben S. Bernanke will speak via satellite to the Chicago Fed’s annual conference on Bank Structure and Competition with the topic being ‘Banking Supervision’.
The dollar edges lower against yen on rising global equity markets ahead of U.S. bank stress tests results
The greenback weakened against the yen on Wednesday as better-than-expected U.S. economic report suggested the worst of the recession’s job losses may have passed and rising global equity markets reduced the U.S. dollar's safe-haven appeal. Investors bought Japanese yen against the dollar and usd/jpy fell to as low as 97.94 in yesterday’s Asia morning before recovering to trade at around 98.35 in late New York session. In addition, traders' focus was on the results of the U.S. bank stress tests, following a Reuters news report which stated that Bank of America would need $34 billion in additional capital.
The single currency rebounded strongly from 1.3245 to 1.3375 against the dollar after release of stronger-than-expected eurozone PMI service data (43.8 in April compared to 40.9 in previous month) but pared its gains in late New York session ahead of the ECB’s policy meeting on Thursday (the central bank is expected to cut interest rates to a record low of 1 percent and may announce measures to stimulate lending and growth).
Meanwhile, sterling rose against the dollar and euro as robust economic data added signs that recession in U.K. had started to ease. The PMI service index, a U.K. gauge of services industries from banks to computing, rose to its highest since 1999 in April to 48.7 from 45.5 in March, while Nationwide Building Society’s consumer confidence gauge increased by 8 points to 50 in last month. The British pound strengthened versus the dollar, euro and yen, climbing to session highs of 1.5150, 0.8804 and 149.33 respectively before stabilising. The Bank of England also meets on Thursday and is forecast to hold its benchmark interest rate at a record low of 0.5 percent.
On the data front, Australian retail sales rose 2.2 percent in March, much better than the economists’ median forecast of a 0.5 percent gain and compared to a 2 percent drop in February. A separate report later in the day from the U.S. showed that companies in the U.S. cut an estimated 491,000 workers from payrolls in April, smaller than the consensus forecast of 650,000 and the previous month's figure was revised from 742,000 to 708,000.
Economic data releases on Thursday include Australia employment change and unemployment rate, Switzerland’s CPI, German factory orders, U.K. BOE rate decision, eurozone ECB rate decision, and U.S. weekly jobless claims, labour cost and productivity. At 13:30GMT, Federal Reserve Chairman Ben S. Bernanke will speak via satellite to the Chicago Fed’s annual conference on Bank Structure and Competition with the topic being ‘Banking Supervision’.
