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Market Review - 29/05/2009 21:04
All times in GMT
Dollar slips broadly on easing global recession
Dollar tumbled against a basket of currencies as investors became more optimistic that recent government stimulus packages will pull the global economy out of the recession. In addition, more upbeat views showed that the worst of the global recession may have passed which sent investors in search for assets with higher yield and dampened dollar’s safe-haven demand. The ICE dollar futures fell to a year low of 79.18 in late New York afternoon.
The British pound posted its biggest monthly gain against the dollar in 24 years and it touched the highest level in 2009 versus the greenback. Cable’s strong rise from 1.5918 started after the release of much better-than-expected U.K. house price index which jumped from –0.3% in April to 1.2% in May. The pound retreated briefly but sharply to 1.6053 in New York morning partly due to cross selling versus euro, however, price then found renewed buying on dips, sending it to this year high at 1.6200 after U.S. GDP came in at –5.7% compared to –6.1% from the previous quarter and the better-than-expected University of Michigan survey (68.7 vs forecast of 67.9) as the data suggested recession was moderating.
Euro also hit a 2009 high of 1.4168 against the greenback after the U.S. data. Furthermore, the rise in global stock markets with some equities markets posting their highest levels in 2009 also reduced safe-haven demand for the dollar.
Surge in commodity prices (oil prices rose to a 6-month high, above $66/barrel and gold price rallied to 3-month high, above $980/oz) and the weak U.S. dollar pushed the 3 major commodity currencies, Aussie dollar, New Zealand dollar and Canadian dollar to multi-month highs against the greenback, aud/usd jumped to 0.8015, nzd/usd rallied to 0.6420 while usd/cad hit 1.0891.
Next Monday will be a holiday in New Zealand and Switzerland. Data to be released in the coming week include Australia retail sales, German, Eurozone and U.K. manufacturing PMI, U.K. Halifax house price, U.S. PCE and core PCE, personal income and spending, ISM manufacturing, construction spending, Canada GDP and PPI on Monday, Australia current account, Switzerland GDP, U.K. construction PMI, Euro zone unemployment, U.S. pending home sales data on Tuesday, Australia GDP, German, Euro zone and U.K. service PMI, Euro zone GDP and PPI, U.S. ADP employment data, durable goods orders, factory orders, ISM non-manufacturing and Fed’s Bernanke will testify on Wednesday, Japan business capex, Australia trade balance, Eurozone retail sales, BoE rate decision, ECB rate decision, U.S. jobless claims, BoC rate decision and Ivey PMI on Thursday, Switzerland CPI, U.K. PPI, Canada unemployment rate, U.S. unemployment rate and non-farm payrolls on Friday.
Dollar tumbled against a basket of currencies as investors became more optimistic that recent government stimulus packages will pull the global economy out of the recession. In addition, more upbeat views showed that the worst of the global recession may have passed which sent investors in search for assets with higher yield and dampened dollar’s safe-haven demand. The ICE dollar futures fell to a year low of 79.18 in late New York afternoon.
The British pound posted its biggest monthly gain against the dollar in 24 years and it touched the highest level in 2009 versus the greenback. Cable’s strong rise from 1.5918 started after the release of much better-than-expected U.K. house price index which jumped from –0.3% in April to 1.2% in May. The pound retreated briefly but sharply to 1.6053 in New York morning partly due to cross selling versus euro, however, price then found renewed buying on dips, sending it to this year high at 1.6200 after U.S. GDP came in at –5.7% compared to –6.1% from the previous quarter and the better-than-expected University of Michigan survey (68.7 vs forecast of 67.9) as the data suggested recession was moderating.
Euro also hit a 2009 high of 1.4168 against the greenback after the U.S. data. Furthermore, the rise in global stock markets with some equities markets posting their highest levels in 2009 also reduced safe-haven demand for the dollar.
Surge in commodity prices (oil prices rose to a 6-month high, above $66/barrel and gold price rallied to 3-month high, above $980/oz) and the weak U.S. dollar pushed the 3 major commodity currencies, Aussie dollar, New Zealand dollar and Canadian dollar to multi-month highs against the greenback, aud/usd jumped to 0.8015, nzd/usd rallied to 0.6420 while usd/cad hit 1.0891.
Next Monday will be a holiday in New Zealand and Switzerland. Data to be released in the coming week include Australia retail sales, German, Eurozone and U.K. manufacturing PMI, U.K. Halifax house price, U.S. PCE and core PCE, personal income and spending, ISM manufacturing, construction spending, Canada GDP and PPI on Monday, Australia current account, Switzerland GDP, U.K. construction PMI, Euro zone unemployment, U.S. pending home sales data on Tuesday, Australia GDP, German, Euro zone and U.K. service PMI, Euro zone GDP and PPI, U.S. ADP employment data, durable goods orders, factory orders, ISM non-manufacturing and Fed’s Bernanke will testify on Wednesday, Japan business capex, Australia trade balance, Eurozone retail sales, BoE rate decision, ECB rate decision, U.S. jobless claims, BoC rate decision and Ivey PMI on Thursday, Switzerland CPI, U.K. PPI, Canada unemployment rate, U.S. unemployment rate and non-farm payrolls on Friday.
