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Market Review - 12/10/2009 20:58 All times in GMT
Dollar falls on recovery hopes and diversification in central banks reserves
The greenback declined on Monday due to President Obama's top economic adviser's comments on recovery and reports showing that global central banks are diversifying their reserve currencies by reducing the portion of U.S. dollar. Obama's top economic advisor Larry Summers said the U.S. is on the path toward recovery, conditions in financial markets are steadier and there have been initial signs of stabilization in housing market. Summers' comments fueled hopes on global recovery and spurred buying in high-yielding assets. Report showed that central banks are lowering the weighting of U.S. dollar in their reserves due to the U.S. government's tolerance on weak dollar.
The single currency initially dipped to 1.4677 (just 3 pips above Friday's 1.4674 low) in Asia due to dollar's broad-based strength but then rebounded in European morning from around 1.4680 on the back of the rise in regional equity markets (DAX and FTSE both opened up over 1%) and also cross buying especially versus yen and sterling. Price advanced to as high as 1.4814 on dollar's weakness in late European session before retreating in relatively thin market (banks were shut becuase of Columbus Day holiday in U.S. although stock markets remained open).
Despite cable's recovery to 1.5883 in European opening, dollar's rebound and cross selling versus euro pressured sterling to a 4 1/2-month low of 1.5728. Price later rebounded in tandem with renewed selling in dollar but upside was limited by the rise in eur/gbp (the pair rose from 0.9269 to 0.9384 before retreating) and traded sideways in U.S. session.
Economic data to be released on Tuesday:
New Zealand retail sales, U.K. RICS house price, BRC retail sales, Australia NAB business confidence, Switzerland PPI, U.K. CPI, RPI, German Zew index, Canada new housing price index.
Dollar falls on recovery hopes and diversification in central banks reserves
The greenback declined on Monday due to President Obama's top economic adviser's comments on recovery and reports showing that global central banks are diversifying their reserve currencies by reducing the portion of U.S. dollar. Obama's top economic advisor Larry Summers said the U.S. is on the path toward recovery, conditions in financial markets are steadier and there have been initial signs of stabilization in housing market. Summers' comments fueled hopes on global recovery and spurred buying in high-yielding assets. Report showed that central banks are lowering the weighting of U.S. dollar in their reserves due to the U.S. government's tolerance on weak dollar.
The single currency initially dipped to 1.4677 (just 3 pips above Friday's 1.4674 low) in Asia due to dollar's broad-based strength but then rebounded in European morning from around 1.4680 on the back of the rise in regional equity markets (DAX and FTSE both opened up over 1%) and also cross buying especially versus yen and sterling. Price advanced to as high as 1.4814 on dollar's weakness in late European session before retreating in relatively thin market (banks were shut becuase of Columbus Day holiday in U.S. although stock markets remained open).
Despite cable's recovery to 1.5883 in European opening, dollar's rebound and cross selling versus euro pressured sterling to a 4 1/2-month low of 1.5728. Price later rebounded in tandem with renewed selling in dollar but upside was limited by the rise in eur/gbp (the pair rose from 0.9269 to 0.9384 before retreating) and traded sideways in U.S. session.
Economic data to be released on Tuesday:
New Zealand retail sales, U.K. RICS house price, BRC retail sales, Australia NAB business confidence, Switzerland PPI, U.K. CPI, RPI, German Zew index, Canada new housing price index.
