Market Review - 23/10/2014 22:50GMT
U.S. dollar rallies versus Japanese yen on upbeat U.S. data
The greenback rallied againt the Japanese yen to a fresh 2-week high at 108.35 on Thursday on renewed risk appetite due to the rise in global stock markets. Dow Jones index closed up by 1.32% or 217 points to 16678.
Despite dollar's brief drop to 107.11 in Asia on Thursday, the greenback rebounded in Europe on renewed risk appetite due to the rally in European equities together with U.S. and Japanese futures. U.S. dollar later rose strongly to as high as 108.35 in New York as U.S. stock markets extended intra-day gains.
On the data front, U.S. jobless claims came in at 283,000 versus economists' forecast of 282,000. U.S. Markit manufacturing PMI flash was 56.2 in October. U.S. leading indicators rose by 0.8%, higher than the expectation of 0.6% rise.
Roberto Guimaraes-Filho, deputy division chief of the Regional Studies Division at the IMF's Asia Pacific Depart. said at a seminar that Japan should go ahead with a second sales tax hike next year in order to maintain credibility of its fiscal framework; the IMF expects Japan's economy to grow by an annualized 3.4% in Jul-Sep, rebounding from the deepest slump since the 2009 global financial crisis in the previous quarter after Apr's tax hike.
The single currency remained under pressure on Thursday partly due to Wednesday's news that Reuters cited source from Spain's Efe news agency reported that at least 11 banks fm 6 European countries are set to fail the region-wide financial health check this Sun. The single currency dropped to an intra-day low of 1.2614 in European morning on Thursday. The pair staged a strong rebound to 1.2676 on short-covering but renewed selling interest knocked price lower to 1.2631 in New York morning after the release of US econ. data before rebounding.
Bank of Italy said latest data indicates Italy Q3 contracted slightly, export outlook uncertain, household, business confidence weak; high risk of prolonged period of low inflation, creating risks for Italy debt-to-GDP ratio; government decision to delay debt-cutting goal reasonable given depth of recession. Italy PM Renzi later said can find additional 1-2 billion euros to meet EU budget requirements.
EU leaders will meet in Brussels on 23/24 October. This will mark the last European Council meeting to be chaired by Herman Van Rompuy. ECB board member Yves Mersch said we are not out of the danger zone; patient is still fragile and unfortunately relapses cannot be ruled out.
The British pound met renewed selling interest at European open on Thursday and extended decline from Tue's high at 1.6186 to a low of 1.5995 low before staging a brief recovery to 1.6052 in NY.
BoE's Broadbent said 'any rises in BoE official interest rate "to be limited and gradual"; neutral real interest rates for UK economy likely to stay low "for some time yet"; UK neutral real interest rates likely to rise eventually as headwinds to growth dissipate.'
Friday will see the release of New Zealand trade balance, imports, exports, China house prices, Germany consumer sentiment, Italy retail sales, UK GDP and U.S. new home sales.
U.S. dollar rallies versus Japanese yen on upbeat U.S. data
The greenback rallied againt the Japanese yen to a fresh 2-week high at 108.35 on Thursday on renewed risk appetite due to the rise in global stock markets. Dow Jones index closed up by 1.32% or 217 points to 16678.
Despite dollar's brief drop to 107.11 in Asia on Thursday, the greenback rebounded in Europe on renewed risk appetite due to the rally in European equities together with U.S. and Japanese futures. U.S. dollar later rose strongly to as high as 108.35 in New York as U.S. stock markets extended intra-day gains.
On the data front, U.S. jobless claims came in at 283,000 versus economists' forecast of 282,000. U.S. Markit manufacturing PMI flash was 56.2 in October. U.S. leading indicators rose by 0.8%, higher than the expectation of 0.6% rise.
Roberto Guimaraes-Filho, deputy division chief of the Regional Studies Division at the IMF's Asia Pacific Depart. said at a seminar that Japan should go ahead with a second sales tax hike next year in order to maintain credibility of its fiscal framework; the IMF expects Japan's economy to grow by an annualized 3.4% in Jul-Sep, rebounding from the deepest slump since the 2009 global financial crisis in the previous quarter after Apr's tax hike.
The single currency remained under pressure on Thursday partly due to Wednesday's news that Reuters cited source from Spain's Efe news agency reported that at least 11 banks fm 6 European countries are set to fail the region-wide financial health check this Sun. The single currency dropped to an intra-day low of 1.2614 in European morning on Thursday. The pair staged a strong rebound to 1.2676 on short-covering but renewed selling interest knocked price lower to 1.2631 in New York morning after the release of US econ. data before rebounding.
Bank of Italy said latest data indicates Italy Q3 contracted slightly, export outlook uncertain, household, business confidence weak; high risk of prolonged period of low inflation, creating risks for Italy debt-to-GDP ratio; government decision to delay debt-cutting goal reasonable given depth of recession. Italy PM Renzi later said can find additional 1-2 billion euros to meet EU budget requirements.
EU leaders will meet in Brussels on 23/24 October. This will mark the last European Council meeting to be chaired by Herman Van Rompuy. ECB board member Yves Mersch said we are not out of the danger zone; patient is still fragile and unfortunately relapses cannot be ruled out.
The British pound met renewed selling interest at European open on Thursday and extended decline from Tue's high at 1.6186 to a low of 1.5995 low before staging a brief recovery to 1.6052 in NY.
BoE's Broadbent said 'any rises in BoE official interest rate "to be limited and gradual"; neutral real interest rates for UK economy likely to stay low "for some time yet"; UK neutral real interest rates likely to rise eventually as headwinds to growth dissipate.'
Friday will see the release of New Zealand trade balance, imports, exports, China house prices, Germany consumer sentiment, Italy retail sales, UK GDP and U.S. new home sales.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.