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Market Review - 04/06/2009 20:54 All times in GMT
Euro rises against the dollar on improving risk appetite
The dollar swung gains and losses against the British pound and euro in a volatile session on Thursday with the Bank of England and European Central Bank leaving interest rates unchanged at record lows. In addition, the upbeat U.S. jobless claims data boosted stock markets on hopes that the U.S economy is on the track to recovery, dampening the demand for greenback as a safe-haven asset.
Although the single currency staged a rebound from Wednesday's low of 1.4109 in European morning against the dollar to as high as 1.4242, euro fell sharply to 1.4070 after European Central Bank kept key interest rates on hold at a record low of 1.0% as investors were concerned over whether the ECB would cut rates in the future. However, euro pared its losses after ECB President Jean-Claude Trichet said the current interest rate level is appropriate and that he sees signs the worst of the recession has passed. Furthermore, U.S. weekly jobless claims fell for a third straight week to 621,000 from 625,000 in the previous week encouraging investors to be more risk-aggressive. DJI gained 74.96 points or 0.86%, Nasdaq rose 24.10 points or 1.32% while S&P closed up 10.70 points or 1.15%.
In European morning, the British pound rebounded to an intra-day high at 1.6436 against the dollar as Halifax house price came out much better than expected at 2.6% in May versus the reading of a decrease of 1.7% in April before easing as traders booked profits ahead of Bank of England rate decision. Cable edged up after BoE left interest rates unchanged at 0.5% and said policymakers would keep their plans to buy 125 billion pounds of government and corporate bonds. However, the British pound nose-dived against the greenback to 1.6082 on rumours that British Prime Minister Gordon Brown would resign. The pair recovered after Brown’s office dismissed the rumours as 'absolute nonsense' and the encouraging U.S. jobless claims data.
Bank of Canada kept its key interest rate at 0.25% and warned that the rapid rise in the Canadian dollar would fully offset the improvement in commodity prices. Usd/cad rose to as high as 1.1161 in New York morning, however, the surge in crude oil futures (up more than 2%) and gains in equity markets pressured the greenback to an intra-day low of 1.0929 before a recovery was seen in late U.S. session.
Data to be released on Friday include Switzerland CPI, U.K. PPI, Canada unemployment rate and the closely-watched U.S. unemployment rate and non-farm payrolls.
Euro rises against the dollar on improving risk appetite
The dollar swung gains and losses against the British pound and euro in a volatile session on Thursday with the Bank of England and European Central Bank leaving interest rates unchanged at record lows. In addition, the upbeat U.S. jobless claims data boosted stock markets on hopes that the U.S economy is on the track to recovery, dampening the demand for greenback as a safe-haven asset.
Although the single currency staged a rebound from Wednesday's low of 1.4109 in European morning against the dollar to as high as 1.4242, euro fell sharply to 1.4070 after European Central Bank kept key interest rates on hold at a record low of 1.0% as investors were concerned over whether the ECB would cut rates in the future. However, euro pared its losses after ECB President Jean-Claude Trichet said the current interest rate level is appropriate and that he sees signs the worst of the recession has passed. Furthermore, U.S. weekly jobless claims fell for a third straight week to 621,000 from 625,000 in the previous week encouraging investors to be more risk-aggressive. DJI gained 74.96 points or 0.86%, Nasdaq rose 24.10 points or 1.32% while S&P closed up 10.70 points or 1.15%.
In European morning, the British pound rebounded to an intra-day high at 1.6436 against the dollar as Halifax house price came out much better than expected at 2.6% in May versus the reading of a decrease of 1.7% in April before easing as traders booked profits ahead of Bank of England rate decision. Cable edged up after BoE left interest rates unchanged at 0.5% and said policymakers would keep their plans to buy 125 billion pounds of government and corporate bonds. However, the British pound nose-dived against the greenback to 1.6082 on rumours that British Prime Minister Gordon Brown would resign. The pair recovered after Brown’s office dismissed the rumours as 'absolute nonsense' and the encouraging U.S. jobless claims data.
Bank of Canada kept its key interest rate at 0.25% and warned that the rapid rise in the Canadian dollar would fully offset the improvement in commodity prices. Usd/cad rose to as high as 1.1161 in New York morning, however, the surge in crude oil futures (up more than 2%) and gains in equity markets pressured the greenback to an intra-day low of 1.0929 before a recovery was seen in late U.S. session.
Data to be released on Friday include Switzerland CPI, U.K. PPI, Canada unemployment rate and the closely-watched U.S. unemployment rate and non-farm payrolls.
