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Market Review - 20/07/2009 22:16 All times in GMT
Dollar falls broadly as news of a rescue package for U.S. lender CIT reduces demand for safe-haven assets
Dollar slid across the board on Monday in part to the news that CIT Group Inc. had clinched $3 billion of emergency financing from a group bondholders, keeping the struggling lender out of bankruptcy and dampening U.S. dollar’s safe-haven appeal. In addition, strong U.S. corporate earnings prompted investors to move back into higher-yielding currencies and stocks. Atlanta Federal Reserve President Dennis Lockhard said on Monday that the U.S. central bank would continue to review its $300 billion longer-term Treasury securities purchase program and the already announced treasury purchases had a positive impact on the economy. Lockhard also stated that U.S. unemployment may get worse before it gets better. An index of the dollar against six major currencies fell to a a six-week low.
Euro extended its recent upmove to as high as 1.4250 in New York morning trade as investors were leaning away from safe-haven assets due to the rise in global stocks. However, the single currency failed to add to its gains against the dollar following an upbeat report on U.S. leading indicators (0.7% versus economists’ expectations of 0.5%). DJI closed up 104.21 points or 1.19%, Nasdaq gained 22.68 points or 1.20%, and S&P added 10.75 points or 1.14%.
Earlier in the day, Rightmove posted a report which showed the average cost of a British home increased by 0.6% this month, after falling 0.4% in June. The report indicated that demand in the U.K. housing market had picked up, signaling the economic slump may be easing. The British pound rose to a session high of 1.6560 against the greenback in New York afternoon. Cross buying on sterling versus euro and yen also led to eur/gbp dropping from last Friday’s high of 0.8659 to as low as 0.8596 while gbp/jpy hit an intra-day high of 156.44.
The surge in commodity prices (oil prices rose to $63.98/barrel and gold was above $950/oz, hitting the highest level in more than a month) and the weak U.S. dollar sent commodity currencies, Aussie dollar, New Zealand dollar and Canadian dollar to multi-week highs against the greenback, aud/usd rose to 0.8176, nzd/usd strengthened to 0.6580 while usd/cad fell to 1.1019. Bank of Canada will announce its rate decision on Tuesday and is widely expected to keep rates unchanged at 0.25%.
Data to be released on Tuesday include Japan BoJ minutes, Australia RBA board minutes, Switzerland trade balance, U.K. PSNCR, Canada rate decision at 13:00GMT and Fed’s chairman Bernanke will speak at 14:00GMT.
Dollar falls broadly as news of a rescue package for U.S. lender CIT reduces demand for safe-haven assets
Dollar slid across the board on Monday in part to the news that CIT Group Inc. had clinched $3 billion of emergency financing from a group bondholders, keeping the struggling lender out of bankruptcy and dampening U.S. dollar’s safe-haven appeal. In addition, strong U.S. corporate earnings prompted investors to move back into higher-yielding currencies and stocks. Atlanta Federal Reserve President Dennis Lockhard said on Monday that the U.S. central bank would continue to review its $300 billion longer-term Treasury securities purchase program and the already announced treasury purchases had a positive impact on the economy. Lockhard also stated that U.S. unemployment may get worse before it gets better. An index of the dollar against six major currencies fell to a a six-week low.
Euro extended its recent upmove to as high as 1.4250 in New York morning trade as investors were leaning away from safe-haven assets due to the rise in global stocks. However, the single currency failed to add to its gains against the dollar following an upbeat report on U.S. leading indicators (0.7% versus economists’ expectations of 0.5%). DJI closed up 104.21 points or 1.19%, Nasdaq gained 22.68 points or 1.20%, and S&P added 10.75 points or 1.14%.
Earlier in the day, Rightmove posted a report which showed the average cost of a British home increased by 0.6% this month, after falling 0.4% in June. The report indicated that demand in the U.K. housing market had picked up, signaling the economic slump may be easing. The British pound rose to a session high of 1.6560 against the greenback in New York afternoon. Cross buying on sterling versus euro and yen also led to eur/gbp dropping from last Friday’s high of 0.8659 to as low as 0.8596 while gbp/jpy hit an intra-day high of 156.44.
The surge in commodity prices (oil prices rose to $63.98/barrel and gold was above $950/oz, hitting the highest level in more than a month) and the weak U.S. dollar sent commodity currencies, Aussie dollar, New Zealand dollar and Canadian dollar to multi-week highs against the greenback, aud/usd rose to 0.8176, nzd/usd strengthened to 0.6580 while usd/cad fell to 1.1019. Bank of Canada will announce its rate decision on Tuesday and is widely expected to keep rates unchanged at 0.25%.
Data to be released on Tuesday include Japan BoJ minutes, Australia RBA board minutes, Switzerland trade balance, U.K. PSNCR, Canada rate decision at 13:00GMT and Fed’s chairman Bernanke will speak at 14:00GMT.
