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Market Review - 17/11/2009 22:11 All times in GMT
Dollar index bounces off from its 15-month low due to profit taking
The dollar rebounded strongly from a 15-month low against a basket of currencies on Tuesday as the market's focus was still on the Fed chief Ben Bernanke's rare comments on Monday when he said that the central bank was attentive to the dollar's movements and reiterated U.S. interest rates will remain low in the near future. U.S. producer prices index showed a rise of 0.3%, smaller than economists' forecast of 0.5%, while net overall capital inflows into the U.S. jumped to $133.5 billion in September from a revised inflow of $25.3 billion in the previous month. U.S. industrial production rose 0.1% in October after a 0.6% gain in September, less than economists' expectations of a 0.4% gain.
Euro fell against most of its counterparts on Tuesday. Although euro briefly rose to 1.5000 versus the greenback earlier in Asian session, profit-taking offers sent the pair lower to 1.4807 in New York morning. Cross selling in euro against sterling and the Japanese yen weighed on the single currency as eur/gbp tumbled to 0.8834 while eur/jpy dropped to as low as 132.45. European Central Bank President Jean-Claude Trichet said that he fully backed comments by U.S. Fed Chief Ben Bernanke's strong dollar analysis made on Monday. Trichet also said that the fiscal situation in some European countries is so bad that there is a danger markets will lose faith in them. He added that third quarter eurozone GDP data confirmed the ECB's base scenario of a progressive pickup in the economy. Eurozone trade data showed a surplus of 3.7 billion euros in September versus the expectation of a deficit of 2.0 billion euros. Eurozone trade deficit in August was revised down to 2.3 billion fm 4.0 billion.
The British pound hit a two-month high against euro on Tuesday as a rise in U.K. inflation added to speculation that the Bank of England may be approaching the end of its quantitative easing program. U.K. consumer price rose by 0.2% in October, higher than the expectation of 0.1% rise. In addition, BoE policymaker Andrew Sentance said that Britain is returning to recovery. Cable dropped to as low as 1.6755 on dollar's broad-based rebound in New York morning. However, buying interest on dips lifted the pound and the pair ended the day with little change.
Data to be released on Wednesday include Australia Westpac leading economic index, Japan machine tools orders, eurozone current accounts, U.K. CBI distribution trade, Canada CPI, U.S. building permits, housing starts, CPI and real earnings.
Dollar index bounces off from its 15-month low due to profit taking
The dollar rebounded strongly from a 15-month low against a basket of currencies on Tuesday as the market's focus was still on the Fed chief Ben Bernanke's rare comments on Monday when he said that the central bank was attentive to the dollar's movements and reiterated U.S. interest rates will remain low in the near future. U.S. producer prices index showed a rise of 0.3%, smaller than economists' forecast of 0.5%, while net overall capital inflows into the U.S. jumped to $133.5 billion in September from a revised inflow of $25.3 billion in the previous month. U.S. industrial production rose 0.1% in October after a 0.6% gain in September, less than economists' expectations of a 0.4% gain.
Euro fell against most of its counterparts on Tuesday. Although euro briefly rose to 1.5000 versus the greenback earlier in Asian session, profit-taking offers sent the pair lower to 1.4807 in New York morning. Cross selling in euro against sterling and the Japanese yen weighed on the single currency as eur/gbp tumbled to 0.8834 while eur/jpy dropped to as low as 132.45. European Central Bank President Jean-Claude Trichet said that he fully backed comments by U.S. Fed Chief Ben Bernanke's strong dollar analysis made on Monday. Trichet also said that the fiscal situation in some European countries is so bad that there is a danger markets will lose faith in them. He added that third quarter eurozone GDP data confirmed the ECB's base scenario of a progressive pickup in the economy. Eurozone trade data showed a surplus of 3.7 billion euros in September versus the expectation of a deficit of 2.0 billion euros. Eurozone trade deficit in August was revised down to 2.3 billion fm 4.0 billion.
The British pound hit a two-month high against euro on Tuesday as a rise in U.K. inflation added to speculation that the Bank of England may be approaching the end of its quantitative easing program. U.K. consumer price rose by 0.2% in October, higher than the expectation of 0.1% rise. In addition, BoE policymaker Andrew Sentance said that Britain is returning to recovery. Cable dropped to as low as 1.6755 on dollar's broad-based rebound in New York morning. However, buying interest on dips lifted the pound and the pair ended the day with little change.
Data to be released on Wednesday include Australia Westpac leading economic index, Japan machine tools orders, eurozone current accounts, U.K. CBI distribution trade, Canada CPI, U.S. building permits, housing starts, CPI and real earnings.
