Market Review - 23/07/2014 22:49GMT
Euro weakens to a fresh 8-month low of 1.3455 on concerns over Russian sanctions
The single currency hit a fresh 8-month low of 1.3455 against the dollar on Wednesday on concerns over more and tougher sanctions on the EU’s third-biggest trading partner, Russia. German government yields fell close to record lows on worries over their potential impact on fragile euro zone growth.
Trading was relatively thin on Wednesday as investors are reluctant to add bets on geopolitical concerns between Russia and the Ukraine. Euro fell to 1.3455 and then bounced briefly to 1.3474 before trading sideways. Market players expect further escalation of tensions may weigh further on the euro if more trade sanctions are enforced on Russia together with ECB’s keeping the door open to a large-scale asset purchase programme.
The British pound rebounded briefly to 1.7095 in Europe just before the release of BOE minutes and then tumbled after the Bank of England minutes failed to boost expectations of an interest rate hike by year-end. Cable fell to an intra-day low of 1.7024 in New York morning before recovering briefly to 1.7051. Euro hit a near two-year low against the British pound of 78.69 pence in Europe before recovering to 79.10 pence after the release of less hawkish BOE minutes.
The greenback fell briefly below Tuesday's low at 101.33 to 101.32 in Europe on Wednesday and then rebounded to 101.55 in late New York. The Australian dollar rose strongly to 0.9455 after the release of higher-than-expected Australia’s CPI on June, dampening the expectations of future rate cuts.
In other news, IMF cut U.S. 2014 growth forecast to 1.7% from Jun forecast of 2% due to 1st quarter growth revision and said 'economic activity to accelerate for rest of the year, kept 2015 forecast at 3%; risks to outlook include slower growth in emerging markets, oil price spikes tied to Ukraine or Iraq, earlier than expected U.S. interest rate hike; U.S. output gap is close to 4% at end-2013, could take until 2018 to close; Fed can keep policy rates at 0 for longer than mid-2015 if inflation stays subdued, sees gradual rate normalization.'
Thursday will see NZ RBNZ rate decision, trade balance, imports, exports, Japan exports, imports, manufacturing PMI, China HSBC manufacturing PMI, France manufacturing PMI, services PMI, Germany manufacturing PMI, services PMI, EU manufacturing PMI, services PMI, Italy retail sales, UK retail sales, U.S. jobless claims, manufacturing PMI and new home sales.
Euro weakens to a fresh 8-month low of 1.3455 on concerns over Russian sanctions
The single currency hit a fresh 8-month low of 1.3455 against the dollar on Wednesday on concerns over more and tougher sanctions on the EU’s third-biggest trading partner, Russia. German government yields fell close to record lows on worries over their potential impact on fragile euro zone growth.
Trading was relatively thin on Wednesday as investors are reluctant to add bets on geopolitical concerns between Russia and the Ukraine. Euro fell to 1.3455 and then bounced briefly to 1.3474 before trading sideways. Market players expect further escalation of tensions may weigh further on the euro if more trade sanctions are enforced on Russia together with ECB’s keeping the door open to a large-scale asset purchase programme.
The British pound rebounded briefly to 1.7095 in Europe just before the release of BOE minutes and then tumbled after the Bank of England minutes failed to boost expectations of an interest rate hike by year-end. Cable fell to an intra-day low of 1.7024 in New York morning before recovering briefly to 1.7051. Euro hit a near two-year low against the British pound of 78.69 pence in Europe before recovering to 79.10 pence after the release of less hawkish BOE minutes.
The greenback fell briefly below Tuesday's low at 101.33 to 101.32 in Europe on Wednesday and then rebounded to 101.55 in late New York. The Australian dollar rose strongly to 0.9455 after the release of higher-than-expected Australia’s CPI on June, dampening the expectations of future rate cuts.
In other news, IMF cut U.S. 2014 growth forecast to 1.7% from Jun forecast of 2% due to 1st quarter growth revision and said 'economic activity to accelerate for rest of the year, kept 2015 forecast at 3%; risks to outlook include slower growth in emerging markets, oil price spikes tied to Ukraine or Iraq, earlier than expected U.S. interest rate hike; U.S. output gap is close to 4% at end-2013, could take until 2018 to close; Fed can keep policy rates at 0 for longer than mid-2015 if inflation stays subdued, sees gradual rate normalization.'
Thursday will see NZ RBNZ rate decision, trade balance, imports, exports, Japan exports, imports, manufacturing PMI, China HSBC manufacturing PMI, France manufacturing PMI, services PMI, Germany manufacturing PMI, services PMI, EU manufacturing PMI, services PMI, Italy retail sales, UK retail sales, U.S. jobless claims, manufacturing PMI and new home sales.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.