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Market Review - 19/10/2009 22:18 All times in GMT
Dollar falls as Fed signals interest rates will remain near zero in the near future
The dollar declined on Monday as the Federal Reserve signaled that borrowing costs would remain at a record low in the near future. The Federal Reserve Bank of New York said in its statement that 'no inference should be drawn' as to policy tightening. In addition, optimism over earnings encouraged investors to buy riskier assets. Higher-yielding currencies such as aussie and New Zealand dollar traded near multi-months high against the greenback at 0.9295 and 0.7576 respectively. DJI closed up 96.28 points and climbed back above the 10000 level.
Euro hit a fresh 2009 high at 1.4982 against the dollar after the Eurogroup finance minsters' meeting at Luxembourg on Monday, despite Eurogroup chairman Jean-Claude Juncker saying that all eurozone countries agreed to stick to the G7 statement on forex. However, Juncker, ECB President Jean-Claude Trichet and EU Economic Affairs Commissioner Joaquin Almunia are scheduled to travel to China to discuss exchange rate policy. In addition, the ministers have a common view that the exit strategy should take off if preconditions are fulfilled in 2011. Earlier in Asian session, euro fell sharply to 1.4829 on cross selling vs yen on speculation that eurozone officials will voice their concerns over the strength of the single currency. Euro rose strongly from there as the Asian and European shares extended gains.
The British pound rallied against the dollar to a four-week high at 1.6436 in late trading on Monday. Earlier in European morning cable dropped to 1.6240 partly due to BOE's Adam Posen was quote in a newspaper interview that 'he is ready to back an increase in the Bank's 175 billion pound quantitative easing program next month.' However, the strength in stock markets around the globe increased the demand for perceived riskier assets. Cross buying in sterling also helped to lift the pound as eur/gbp fell sharply from 0.9190 to 0.9105 in New York afternoon before recovering.
Data to be released on Tuesday include machine tool orders in Japan, PPI in Germany; PSNCR in U.K; building permits, housing starts, PPI and PCE in U.S.; leading indicators and BOC rate decision in Canada.
Dollar falls as Fed signals interest rates will remain near zero in the near future
The dollar declined on Monday as the Federal Reserve signaled that borrowing costs would remain at a record low in the near future. The Federal Reserve Bank of New York said in its statement that 'no inference should be drawn' as to policy tightening. In addition, optimism over earnings encouraged investors to buy riskier assets. Higher-yielding currencies such as aussie and New Zealand dollar traded near multi-months high against the greenback at 0.9295 and 0.7576 respectively. DJI closed up 96.28 points and climbed back above the 10000 level.
Euro hit a fresh 2009 high at 1.4982 against the dollar after the Eurogroup finance minsters' meeting at Luxembourg on Monday, despite Eurogroup chairman Jean-Claude Juncker saying that all eurozone countries agreed to stick to the G7 statement on forex. However, Juncker, ECB President Jean-Claude Trichet and EU Economic Affairs Commissioner Joaquin Almunia are scheduled to travel to China to discuss exchange rate policy. In addition, the ministers have a common view that the exit strategy should take off if preconditions are fulfilled in 2011. Earlier in Asian session, euro fell sharply to 1.4829 on cross selling vs yen on speculation that eurozone officials will voice their concerns over the strength of the single currency. Euro rose strongly from there as the Asian and European shares extended gains.
The British pound rallied against the dollar to a four-week high at 1.6436 in late trading on Monday. Earlier in European morning cable dropped to 1.6240 partly due to BOE's Adam Posen was quote in a newspaper interview that 'he is ready to back an increase in the Bank's 175 billion pound quantitative easing program next month.' However, the strength in stock markets around the globe increased the demand for perceived riskier assets. Cross buying in sterling also helped to lift the pound as eur/gbp fell sharply from 0.9190 to 0.9105 in New York afternoon before recovering.
Data to be released on Tuesday include machine tool orders in Japan, PPI in Germany; PSNCR in U.K; building permits, housing starts, PPI and PCE in U.S.; leading indicators and BOC rate decision in Canada.
