The greenback ends mixed on Wednesday after soft U.S.home sales data: April 24, 2014

Market Review -23/04/2014    22:34GMT 

The greenback ends mixed on Wednesday after soft U.S.home sales data

 The greenback ended relativelyflat against other major currencies on Wednesday after official data revealedthat U.S. home sales came in lower than expected in March and remindedinvestors that the Federal Reserve plans will keep interest rates low for theforeseeable future even when stimulus programs wind down. 

Versus the Japanese yen, dollardropped after meeting renewed selling at 102.69 in Asia and intra-day declineaccelerated in European morning as risk aversion increased due to the fall inEuropean stock markets. Dollar eventually fell to 102.17 before recovering to102.39 in New York morning but soft U.S. home sales data softened demand forgreenback again and price rebounded to as high as 102.57 in Australian morningon Thursday. 

 U.S. Commerce Departmentreported that sales on new homes dropped 14.5% to a seasonally adjusted rate of384,000, lower than the median forecast of a sales rate of 450,000.  

 The single currency wentthrough a 'roller-coaster' session on Wednesday. Despite a rebound from Asianlow 1.3801 to 1.3837 at European open, price retreated to 1.3799 after releaseof weaker than expected French PMIs but only to rally to 1.3855 as PMIs fromGermany and euro zone beat forecasts. However, renewed selling in eur/jpy checkedintra-day gain there and price later fell to 1.3812 in New York beforestabilizing. 

 French manufacturing PMI andservices PMI fell to 50.9 and 50.3 in March. Germany's manufacturing PMI roseto 54.2 from 53.7 in March, ahead of expectations for a reading of 53.8.Germany's services PMI increased to 55.0 from 53.0, better than the forecast of53.3. In euro zone, manufacturing PMI in April rose to 53.3, compared to theexpectation of an unchanged reading at 53.0. The bloc's services PMI rose to53.1 from 52.2 in previous month, better then forecasts for 52.5. 

 Cable retreated after a briefbounce to 1.6836 in Asia and price remained under pressure for rest of the day.The British pound dropped to 1.6800 against the U.S. dollar in European morningbefore recovering to 1.6827, however, price came under another round of sellingpressure after minutes of the Bank of England's April meeting showed a widerange of views over economic slack and the inflation outlook. Broad basedselling in sterling knocked price lower in New York morning and cableeventually fell to a fresh 1-week low at 1.6762 before stabilizing. 

Bank of England minutes stated'voted 9-0 to keep QE total at 375 billion pounds in April; voted 9-0 to keepinterest rates at 0.5%; show MPC members "had a range opinions" onslack in U.K. economy and medium term inflation outlook; domestic recoverybuilding momentum, some signs of modest rebalancing towards investment; somescope for further improvement in credit conditions, but likely credit spreadswill remain high relative to pre-crisis levels for some time; possible asustainable rise in real wages and incomes, consistent with durable recovery,is in prospect; MPC members "held a range of views" about the extentto self employment represents a from of labour market slack.' 

In other news, ECB policymakerEwald Nowotny said 'in principle, would rule out QE programme to buy sovereignbounds; but the time for such a QE programme has not yet come; don't seeprospect of deflation in euro zone; will only be able in June to whether weface Japan-style deflation risk; don't think we should take action before June;no urgent need for ECB to act; an interest rate cut could make sense as part ofa package of measures.'  

Data to be released on Thursday:  

New Zealand RBNZ rate decision,Switzerland trade balance, France manufacturing confidence and businessconfidence, Germany IFO, U.K. CBI reported sales, U.S. durable goods andinitial jobless claims.