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Market Review - 10/06/2009 21:29 All times in GMT
Dollar rises broadly on solid demand for U.S. Treasury notes
The U.S. currency was able to recover some of the losses it made this week after the government sold $19 billion in 10-year notes on Wednesday. Although the yields increased by as much as 0.13% to 3.9%, the auction result eased fears about the U.S.’s ability to finance its economic rescue plans and the expanding budget deficit by selling long-term debt. In addition, Richmond Federal Reserve Jeffrey Lacker said that the high yields in U.S. Treasuries reflect investors are optimistic on the present recovery and believe that the Fed could higher rates sooner than expected. Furthermore, The Fed’s Beige Book reported that U.S. economic conditions were weak or got worse through May but some areas of the country saw signs that the contraction was moderating.
In European morning, euro rose to an intra-day high of 1.4145 against the dollar after comments from Russian Central Bank’s first deputy chairman, Alexei Ulyukayev, who said that Russia, the fifth largest holder of U.S. government debt, may diversify some of its reverses from U.S. Treasuries to International Monetary Fund bonds. However, the single currency tumbled in New York afternoon to 1.3914 versus the greenback after release of the upbeat Beige Book report before rebounding partly due to short-covering. Cross selling against the British pound also weighed on euro, with eur/gbp dropping from 0.8635 to 0.8544.
The British pound rose against the dollar after release of better-than-expected U.K. industrial production (0.3% in April versus –0.6% in March) and manufacturing production (0.2% in April compared to forecast of 0.0%). However, cable dropped again after dovish comments from BoE’s Barker who said that rates could stay low for some time. In late New York session, the pound tumbled to an intra-day low of 1.6241 versus the U.S. currency after the U.S. Treasury auction and the Fed's Beige Book.
Data to be released on Thursday include Japan GDP, Australia unemployment rate, German WPI, U.S. jobless claims, retail sales, business inventories and Canada capacity utilisation.
Dollar rises broadly on solid demand for U.S. Treasury notes
The U.S. currency was able to recover some of the losses it made this week after the government sold $19 billion in 10-year notes on Wednesday. Although the yields increased by as much as 0.13% to 3.9%, the auction result eased fears about the U.S.’s ability to finance its economic rescue plans and the expanding budget deficit by selling long-term debt. In addition, Richmond Federal Reserve Jeffrey Lacker said that the high yields in U.S. Treasuries reflect investors are optimistic on the present recovery and believe that the Fed could higher rates sooner than expected. Furthermore, The Fed’s Beige Book reported that U.S. economic conditions were weak or got worse through May but some areas of the country saw signs that the contraction was moderating.
In European morning, euro rose to an intra-day high of 1.4145 against the dollar after comments from Russian Central Bank’s first deputy chairman, Alexei Ulyukayev, who said that Russia, the fifth largest holder of U.S. government debt, may diversify some of its reverses from U.S. Treasuries to International Monetary Fund bonds. However, the single currency tumbled in New York afternoon to 1.3914 versus the greenback after release of the upbeat Beige Book report before rebounding partly due to short-covering. Cross selling against the British pound also weighed on euro, with eur/gbp dropping from 0.8635 to 0.8544.
The British pound rose against the dollar after release of better-than-expected U.K. industrial production (0.3% in April versus –0.6% in March) and manufacturing production (0.2% in April compared to forecast of 0.0%). However, cable dropped again after dovish comments from BoE’s Barker who said that rates could stay low for some time. In late New York session, the pound tumbled to an intra-day low of 1.6241 versus the U.S. currency after the U.S. Treasury auction and the Fed's Beige Book.
Data to be released on Thursday include Japan GDP, Australia unemployment rate, German WPI, U.S. jobless claims, retail sales, business inventories and Canada capacity utilisation.
