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Market Review - 24/06/2009 19:25 All times in GMT
Dollar rebounds against European currencies as Fed removes low inflation warning
The greenback rose against European currencies on Wednesday as the Fed left interest rates unchanged as expected but removed the warning that inflation could be undesirably low. Investors interpreted the statement as a hint that the Fed rate may increase in the fourth quarter. In addition, the Fed also repeated that they will keep an eye on the market to evaluate the timing and size of purchases of securities. Earlier in the day, U.S. durable goods came out at 1.8%, better than the forecast of -0.8%, which also supported the U.S. dollar.
Euro rose initially to 1.4139 in European morning session b4 retreating, price declined 1.24% to as low as 1.3888 versus the dollar after the ECB's 1-year tender showed that the central bank will lend 442 billion euros in its first 1-year refinancing operation. This figure was above the median forecast of around 300 billion euros. The single currency fell to 132.98 yen in late New York trading but rallied against the Swiss Franc to as high as 1.5381 on rumours that the SNB was selling the Swiss franc again.
The British pound tumbled after rallying to 1.6605 in London morning to as low as 1.6369 after Bank of England's King said weaker exchange rate may help U.K. recover faster than other economies. King did not think lending would recover much until bank balance sheets go healthier. GBP/JPY also fell 1.2% to 156.17.
U.S. treasury debt prices declined with the 30-year bond and down over a point in disappointment that the Fed Reserve did not extend programs for buying longer-dated treasuries and mortgage-backed securities. The Fed said in March it would buy $300 billion of longer-dated Treasuries over six months in an effort to free up lending and lower longer-term rates like those on mortgage.
Economic data to be released on Thursday include New Zealand's current account, eurozone industrial orders, and U.S. GDP, personal consumption, PCE and weekly jobless claims.
Dollar rebounds against European currencies as Fed removes low inflation warning
The greenback rose against European currencies on Wednesday as the Fed left interest rates unchanged as expected but removed the warning that inflation could be undesirably low. Investors interpreted the statement as a hint that the Fed rate may increase in the fourth quarter. In addition, the Fed also repeated that they will keep an eye on the market to evaluate the timing and size of purchases of securities. Earlier in the day, U.S. durable goods came out at 1.8%, better than the forecast of -0.8%, which also supported the U.S. dollar.
Euro rose initially to 1.4139 in European morning session b4 retreating, price declined 1.24% to as low as 1.3888 versus the dollar after the ECB's 1-year tender showed that the central bank will lend 442 billion euros in its first 1-year refinancing operation. This figure was above the median forecast of around 300 billion euros. The single currency fell to 132.98 yen in late New York trading but rallied against the Swiss Franc to as high as 1.5381 on rumours that the SNB was selling the Swiss franc again.
The British pound tumbled after rallying to 1.6605 in London morning to as low as 1.6369 after Bank of England's King said weaker exchange rate may help U.K. recover faster than other economies. King did not think lending would recover much until bank balance sheets go healthier. GBP/JPY also fell 1.2% to 156.17.
U.S. treasury debt prices declined with the 30-year bond and down over a point in disappointment that the Fed Reserve did not extend programs for buying longer-dated treasuries and mortgage-backed securities. The Fed said in March it would buy $300 billion of longer-dated Treasuries over six months in an effort to free up lending and lower longer-term rates like those on mortgage.
Economic data to be released on Thursday include New Zealand's current account, eurozone industrial orders, and U.S. GDP, personal consumption, PCE and weekly jobless claims.
