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Market Review - 21/05/2009 21:20 All times in GMT
Dollar falls to a new low for 2009 against a basket of currencies despite the decline in U.S. stocks
The greenback tumbled broadly on Thursday despite falling U.S. stocks as investors continued to focus on the view that the global economy is showing signs of stabilisation. The ICE future dollar index, which measures the dollar's strength against a basket of six other currencies, fell to its lowest level this year at 80.367 in New York trading, while dollar weakened to as low as 93.96 versus the yen and 1.0914 against the Swiss franc before stabilising.
Euro rallied against the dollar and touched a five-month high of 1.3924 in New York afternoon session as optimism over the global economy prompted investors to move money out of safe-haven assets. Earlier in the day, data from eurozone showed that Europe's manufacturing and service industries contracted at the slowest pace in eight months in May (eurozone's Service PMI and Manufacturing PMI in May rose to 44.7 and 40.5 from 43.8 and 36.8 in the prior month respectively).
Sterling tumbled broadly in earlier trading after U.S. credit ratings firm Standard & Poor's lowered the outlook for the U.K.'s to 'negative' from 'stable' because of the nation's increasing debt burden. The government's budget deficit this year will reach 175 billion pounds ($273 billion), or 12.4 percent of gross domestic product, Chancellor of the Exchequer Alistair Darling said on April 22. The British pound fell sharply after announcement and dropped to as low as 1.5514, 0.8871 and 146.88 against the dollar, euro and Japanese yen respectively before reversing as investors' appetite for risk remained. In New York trading, the pound rose to a seven-month high of 1.5892 against the dollar and touched a session high of 150.04 versus the yen.
U.S. stocks declined on Thursday on concerns about U.S. budget deficit. The Dow Jones industrial average index tumbled 129 points or 1.54 percent to 8,292, while Nasdaq Composite index and S&P's 500 index fell 1.68 percent and 1.89 percent to 888 and 1,695 respectively.
On the U.S. data front, initial jobless claims fell by 12,000 to 631,000 in the week ended May 16, from a revised 643,000 in the prior week that was higher than economists' estimate of 630,000. Other reports showed that manufacturing in the Philadelphia region contracted in May at the slowest pace in eight months as shipments and employment improved (Philadelphia's general economic index climbed to minus 22.6 this month from minus 24.4 in April), while the index of U.S. leading economic indicators increased 1 percent in April, the biggest gain since November 2005, after a 0.2 percent drop in March.
Economic data releases on Friday include Japan BOJ rate decision and leading indicators, U.K. gross domestic products, and Canada retail sales. Economists expect the Bank of Japan to keep its key interest rates at 0.1 percent and the central bank may upgrade its assessment of the economy for the first time in nearly three years.
Dollar falls to a new low for 2009 against a basket of currencies despite the decline in U.S. stocks
The greenback tumbled broadly on Thursday despite falling U.S. stocks as investors continued to focus on the view that the global economy is showing signs of stabilisation. The ICE future dollar index, which measures the dollar's strength against a basket of six other currencies, fell to its lowest level this year at 80.367 in New York trading, while dollar weakened to as low as 93.96 versus the yen and 1.0914 against the Swiss franc before stabilising.
Euro rallied against the dollar and touched a five-month high of 1.3924 in New York afternoon session as optimism over the global economy prompted investors to move money out of safe-haven assets. Earlier in the day, data from eurozone showed that Europe's manufacturing and service industries contracted at the slowest pace in eight months in May (eurozone's Service PMI and Manufacturing PMI in May rose to 44.7 and 40.5 from 43.8 and 36.8 in the prior month respectively).
Sterling tumbled broadly in earlier trading after U.S. credit ratings firm Standard & Poor's lowered the outlook for the U.K.'s to 'negative' from 'stable' because of the nation's increasing debt burden. The government's budget deficit this year will reach 175 billion pounds ($273 billion), or 12.4 percent of gross domestic product, Chancellor of the Exchequer Alistair Darling said on April 22. The British pound fell sharply after announcement and dropped to as low as 1.5514, 0.8871 and 146.88 against the dollar, euro and Japanese yen respectively before reversing as investors' appetite for risk remained. In New York trading, the pound rose to a seven-month high of 1.5892 against the dollar and touched a session high of 150.04 versus the yen.
U.S. stocks declined on Thursday on concerns about U.S. budget deficit. The Dow Jones industrial average index tumbled 129 points or 1.54 percent to 8,292, while Nasdaq Composite index and S&P's 500 index fell 1.68 percent and 1.89 percent to 888 and 1,695 respectively.
On the U.S. data front, initial jobless claims fell by 12,000 to 631,000 in the week ended May 16, from a revised 643,000 in the prior week that was higher than economists' estimate of 630,000. Other reports showed that manufacturing in the Philadelphia region contracted in May at the slowest pace in eight months as shipments and employment improved (Philadelphia's general economic index climbed to minus 22.6 this month from minus 24.4 in April), while the index of U.S. leading economic indicators increased 1 percent in April, the biggest gain since November 2005, after a 0.2 percent drop in March.
Economic data releases on Friday include Japan BOJ rate decision and leading indicators, U.K. gross domestic products, and Canada retail sales. Economists expect the Bank of Japan to keep its key interest rates at 0.1 percent and the central bank may upgrade its assessment of the economy for the first time in nearly three years.
