Market Review - 15/07/2014 22:35GMT
Dollar gains broadly after upbeat U.S, data and Yellen's comments
The greenback rose against majority of its peers on Tuesday after Fed's Yellen said the country's economy continues to recovery and that Fed officials might consider accelerating their timetable for a rate hike.
Federal Reserve Chair Janet Yellen, in her testimony to the Senate Banking Committee, said 'economy continuing to improve but recovery not yet complete; increases in Federal funds rate target likely would occur sooner and be more rapid than currently envisioned if labor market continues to improve more quickly than anticipated by FOMC; FOMC believes high degree of monetary policy accommodation remains appropriate; too many americans remain unemployed, inflation remains below fed's long-run objective and necessary financial reforms remain incomplete; significant slack remains in labor markets, highlighted by the continued slow pace of growth in most measures of hourly compensation; most FOMC participants project that total and core inflation will be between 1.5% and 1.75% for this year as a whole; considerable uncertainty surrounds FOMC's projections for economic growth, unemployment and inflation.'
The single currency traded in choppy fashion in Asia and briefly rebounded to 1.3628 in European morning, however, fell sharply to 1.3587 on the release of downbeat German ZEW economic sentiment and current conditions. Despite a brief recovery to 1.3621 ahead of New York open, euro tumbled to an intra-day low at 1.3562 in New York morning on dollar's broad-based strength following Fed Yellen's testimony.
Germany ZEW economic sentiment and current conditions came in weaker-than-expected at 27.1 and 61.8 vs forecasts of 28.0 and 67.0.
Although the British pound remained under pressure in Asia and dropped to session low at 1.7059 in early European morning, price rallied after the release of a surprise increase in UK inflation. Cable continued to strengthen and rose to a fresh near 6-year high at 1.7192 helped by active cross-buying of sterling versus euro (eur/gbp fell to a fresh 1-1/2 year trough at 0.7911). However, price pared its gains and swiftly retreated to 1.7138 at New York afternoon on comments from Yellen.
Versus the Japanese yen, the greenback strengthened to 101.65 in Asian morning after BoJ kept its rate unchanged and continued to traded with a firm bias throughout European session. Despite brief retreat to session low at 101.44 as Yellen began her testimony, dollar rose to an intra-day high at 101.75 in New York morning before stabilizing.
In other news, BoJ Governor Kuroda said 'even if economy contracts in Apr-Jun, expect rebound in Jul-Sep; private consumption will likely remain firm as trend; recovery in Japan exports is delayed due to weakness in ASEAN economies.'
On the data front, U.S. NY Fed manufacturing came in much better-than-expected at 25.6 vs forecast of 17.0 whilst retail sales m/m n retail sales ex-auto m/m came in weaker-than-expected at 0.2% n 0.4% vs forecasts of 0.6% n 0.5% respectively.
Data to be released on Wednesday:
New Zealand CPI, China GDP, retail sales, industrial output, Italy trade balance, UK ILO unemployment, claimant count, Swiss ZEW sentiment, U.S. PPI, core PPI, net L-T flows, capacity utilization, industrial output, NAHB housing market index, Fed beige book and Canada BoC rate decision.
Dollar gains broadly after upbeat U.S, data and Yellen's comments
The greenback rose against majority of its peers on Tuesday after Fed's Yellen said the country's economy continues to recovery and that Fed officials might consider accelerating their timetable for a rate hike.
Federal Reserve Chair Janet Yellen, in her testimony to the Senate Banking Committee, said 'economy continuing to improve but recovery not yet complete; increases in Federal funds rate target likely would occur sooner and be more rapid than currently envisioned if labor market continues to improve more quickly than anticipated by FOMC; FOMC believes high degree of monetary policy accommodation remains appropriate; too many americans remain unemployed, inflation remains below fed's long-run objective and necessary financial reforms remain incomplete; significant slack remains in labor markets, highlighted by the continued slow pace of growth in most measures of hourly compensation; most FOMC participants project that total and core inflation will be between 1.5% and 1.75% for this year as a whole; considerable uncertainty surrounds FOMC's projections for economic growth, unemployment and inflation.'
The single currency traded in choppy fashion in Asia and briefly rebounded to 1.3628 in European morning, however, fell sharply to 1.3587 on the release of downbeat German ZEW economic sentiment and current conditions. Despite a brief recovery to 1.3621 ahead of New York open, euro tumbled to an intra-day low at 1.3562 in New York morning on dollar's broad-based strength following Fed Yellen's testimony.
Germany ZEW economic sentiment and current conditions came in weaker-than-expected at 27.1 and 61.8 vs forecasts of 28.0 and 67.0.
Although the British pound remained under pressure in Asia and dropped to session low at 1.7059 in early European morning, price rallied after the release of a surprise increase in UK inflation. Cable continued to strengthen and rose to a fresh near 6-year high at 1.7192 helped by active cross-buying of sterling versus euro (eur/gbp fell to a fresh 1-1/2 year trough at 0.7911). However, price pared its gains and swiftly retreated to 1.7138 at New York afternoon on comments from Yellen.
Versus the Japanese yen, the greenback strengthened to 101.65 in Asian morning after BoJ kept its rate unchanged and continued to traded with a firm bias throughout European session. Despite brief retreat to session low at 101.44 as Yellen began her testimony, dollar rose to an intra-day high at 101.75 in New York morning before stabilizing.
In other news, BoJ Governor Kuroda said 'even if economy contracts in Apr-Jun, expect rebound in Jul-Sep; private consumption will likely remain firm as trend; recovery in Japan exports is delayed due to weakness in ASEAN economies.'
On the data front, U.S. NY Fed manufacturing came in much better-than-expected at 25.6 vs forecast of 17.0 whilst retail sales m/m n retail sales ex-auto m/m came in weaker-than-expected at 0.2% n 0.4% vs forecasts of 0.6% n 0.5% respectively.
Data to be released on Wednesday:
New Zealand CPI, China GDP, retail sales, industrial output, Italy trade balance, UK ILO unemployment, claimant count, Swiss ZEW sentiment, U.S. PPI, core PPI, net L-T flows, capacity utilization, industrial output, NAHB housing market index, Fed beige book and Canada BoC rate decision.
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