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Market Review - 24/09/2009 20:45 All times in GMT
Dollar rises broadly as weak home sales data and G20 meeting decreases risk appetite
The greenback staged its second day of rebound on Thursday as the housing data from U.S. was unexpectedly weak. Existing home sales came out at 5.10M and a decrease of 2.7% month-on-month in August, worse than the forecast figures of 5.35M and an increase of 2.1% respectively. Investors were shocked by the weak housing data (despite the better-than-expected jobless claims) and diminished their demand on high-yielding assets, Dow Jones Index fell 41 points to 9707 level and dollar became the gainer due to its save-haven appeal. Furthermore, investors unwound their short dollar positions as German Chancellor Angela Merkel told reporters in Berlin that exchange rate movements will be a topic of discussion by the leaders at the G20 summit meeting in Pittsburgh.
The British pound was the biggest loser among the greenback's major counterparts, price traded sideways in Asia and then tumbled fm 1.6389 after BOE Governor Mervyn King said that 'a weaker sterling was helping necessary balancing of U.K. economy toward exports'. Traders took King's comments as a sign that the central bank is okay with a weak sterling as long as it helps the U.K. economy to re-balance in regards to exports. Sterling once fell to 1.6023 before recovering in late U.S. session.
The single currency rebounded in European session on active cross buying versus sterling (due to BOE King's dovish comments) and reached an intra-day high of 1.4803, however, price retreated from there due to another round of short-covering buying on dollar and more selling emerged after the release of U.S. existing home sales data. Euro fell to as low as 1.4628 in New York afternoon before recovering, while Swiss franc also weakened to 1.0325 versus dollar on decreased risk-appetite.
Economic data to be released on Friday include:
New Zealand trade balance, Japan BoJ minutes, CSPI index, U.S. durable goods, University of Michigan survey and new home sales.
Dollar rises broadly as weak home sales data and G20 meeting decreases risk appetite
The greenback staged its second day of rebound on Thursday as the housing data from U.S. was unexpectedly weak. Existing home sales came out at 5.10M and a decrease of 2.7% month-on-month in August, worse than the forecast figures of 5.35M and an increase of 2.1% respectively. Investors were shocked by the weak housing data (despite the better-than-expected jobless claims) and diminished their demand on high-yielding assets, Dow Jones Index fell 41 points to 9707 level and dollar became the gainer due to its save-haven appeal. Furthermore, investors unwound their short dollar positions as German Chancellor Angela Merkel told reporters in Berlin that exchange rate movements will be a topic of discussion by the leaders at the G20 summit meeting in Pittsburgh.
The British pound was the biggest loser among the greenback's major counterparts, price traded sideways in Asia and then tumbled fm 1.6389 after BOE Governor Mervyn King said that 'a weaker sterling was helping necessary balancing of U.K. economy toward exports'. Traders took King's comments as a sign that the central bank is okay with a weak sterling as long as it helps the U.K. economy to re-balance in regards to exports. Sterling once fell to 1.6023 before recovering in late U.S. session.
The single currency rebounded in European session on active cross buying versus sterling (due to BOE King's dovish comments) and reached an intra-day high of 1.4803, however, price retreated from there due to another round of short-covering buying on dollar and more selling emerged after the release of U.S. existing home sales data. Euro fell to as low as 1.4628 in New York afternoon before recovering, while Swiss franc also weakened to 1.0325 versus dollar on decreased risk-appetite.
Economic data to be released on Friday include:
New Zealand trade balance, Japan BoJ minutes, CSPI index, U.S. durable goods, University of Michigan survey and new home sales.
