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Market Review - 20/05/2009 21:21 All times in GMT
The greenback falls to a 5-month low against a basket of currencies as safe-haven demand wanes
The greenback tumbled to a five-month low against a basket of currencies on Wednesday due to increasing optimism that the worst of the global financial crisis had passed which dampened the safe-haven demand. In late New York session, the ICE future dollar index slid 1.16 percent to trade at 81.143, after dropping to as low as 80.909.
Investors' risk appetite improved after U.S. Treasury Secretary Timothy Geithner said the financial system was 'starting to heal' thanks to the government's bailout efforts. The euro, Australian dollar and New Zealand dollar moved higher versus the U.S. currency after the comments and touched session highs of 1.3831, 0.7810 and 0.6114 and respectively in New York trading before stabilising.
The British pound strengthened versus the dollar and rallied to a seven-month high of 1.5795 in New York afternoon session after minutes of the Federal Reserve’s latest policy meeting showed the central bank considered increasing purchases of securities. Earlier in the day, Bank of England policy makers voted unanimously this month to extend their quantitative easing plan by 50 billion pounds ($78 billion) after initially debating whether to increase the amount in the program to fight the recession.
The Canadian dollar jumped to a multi-month high versus the greenback to 1.1363 as rising oil and equity prices as well as inflation data suggested it was less likely that the Bank of Canada will resort to unconventional measures, or quantitative easing, to stimulate economy. Canada’s consumer price index in April dropped to a 14-year low of 0.4 percent from 1.2 percent in March, while the core inflation rate fell to 1.8 percent from 2.0 percent in the previous month.
Data from Japan showed the economy shrank by a record pace last quarter as exports collapsed and consumers and businesses slashed spending. Gross domestic product fell by an annualised 15.2 percent in the three months ended March 31, following a revised fourth-quarter drop of 14.4 percent. The economy contracted 3.5 percent in the year ended March 31, the most since records began in 1955.
Economic data releases on Thursday include Japan tertiary industry index, German service PMI and manufacturing PMI, eurozone service PMI and manufacturing PMI, U.K. retail sales and PSNCR, Canada wholesale sales, and U.S. weekly jobless claims, leading indicators and Philadelphia Fed survey.
The greenback falls to a 5-month low against a basket of currencies as safe-haven demand wanes
The greenback tumbled to a five-month low against a basket of currencies on Wednesday due to increasing optimism that the worst of the global financial crisis had passed which dampened the safe-haven demand. In late New York session, the ICE future dollar index slid 1.16 percent to trade at 81.143, after dropping to as low as 80.909.
Investors' risk appetite improved after U.S. Treasury Secretary Timothy Geithner said the financial system was 'starting to heal' thanks to the government's bailout efforts. The euro, Australian dollar and New Zealand dollar moved higher versus the U.S. currency after the comments and touched session highs of 1.3831, 0.7810 and 0.6114 and respectively in New York trading before stabilising.
The British pound strengthened versus the dollar and rallied to a seven-month high of 1.5795 in New York afternoon session after minutes of the Federal Reserve’s latest policy meeting showed the central bank considered increasing purchases of securities. Earlier in the day, Bank of England policy makers voted unanimously this month to extend their quantitative easing plan by 50 billion pounds ($78 billion) after initially debating whether to increase the amount in the program to fight the recession.
The Canadian dollar jumped to a multi-month high versus the greenback to 1.1363 as rising oil and equity prices as well as inflation data suggested it was less likely that the Bank of Canada will resort to unconventional measures, or quantitative easing, to stimulate economy. Canada’s consumer price index in April dropped to a 14-year low of 0.4 percent from 1.2 percent in March, while the core inflation rate fell to 1.8 percent from 2.0 percent in the previous month.
Data from Japan showed the economy shrank by a record pace last quarter as exports collapsed and consumers and businesses slashed spending. Gross domestic product fell by an annualised 15.2 percent in the three months ended March 31, following a revised fourth-quarter drop of 14.4 percent. The economy contracted 3.5 percent in the year ended March 31, the most since records began in 1955.
Economic data releases on Thursday include Japan tertiary industry index, German service PMI and manufacturing PMI, eurozone service PMI and manufacturing PMI, U.K. retail sales and PSNCR, Canada wholesale sales, and U.S. weekly jobless claims, leading indicators and Philadelphia Fed survey.
