Market Review - 16/04/2015 22:59GMT
Dollar weakens on broad-based long liquidation
The single currency fluctuated wildly again on Thursday as the pair jumped to 1.0747 at Tokyo opening and then ratcheted lower to an intra-day low of 1.0625 but renewed buying quickly emerged again. Euro rose to 1.0768 after the release of U.S. jobless claims and then retreated to 1.0685 before rallying to 1.0818 after mixed comments about U.S. rate hike from U.S. Federal officials.
Vice Chair Stanley Fischer emphasized the determining role of data on the exact timing of a rate hike at some point later this year. But he gave no sense of when he thought that would be. Cleveland Fed President Loretta Mester said the Federal Reserve should begin a gradual series of interest rate hikes "relatively soon" as long as the economy rebounds from a soft first quarter, since the benefits of delaying are running thin.
Boston Federal Reserve President Eric Rosengren made it clear that he views the timing of a first rate hike as hardly imminent and said the U.S labor market needs to strengthen further and inflation needs to show signs of heading back up to 2 percent before the Federal Reserve will raise interest rates. Rosengren also said that given such lower normal long-run interest rates, central banks in developed countries may have set their inflation targets too low, making them more vulnerable to repeated bouts of near-zero interest rates. The Fed, which has kept rates near zero since December 2008, has an inflation target of 2 percent, as do several other major central banks.
U.S. Treasury's Lew, in meeting with Japanese finance minister Aso, highlighted importance of using all policy tools to support recovery, escape deflation in Japan. Lew told Aso it is critical for all countries to honor G7, G20 exchange rate commitments, including using domestic policy tools for domestic purposes and not targeting exchange rates. Lew and Aso shared views on importance of encouraging new multilateral institutions to complement, uphold high standards of existing institutions.
The greenback briefly dropped to 118.80 in Asian morning, however, short-covering above Wednesday's low at 118.79 lifted the pair to 119.47 and then fell again to 118.82 near NY close, however, trading was relatively thin as focus was on other dollar majors.
Cable moved closely with euro in Asia n European morning. Despite a brief rise to a fresh near 1-week peak at 1.4880 shortly after Asian open, price retreated to 1.4812 in European morning n then recovered to 1.4855 due to cross-buying in sterling vs euro and then dropped to 1.4812 again but only to rally to as high as 1.4970 near New York close due to dollar's broad-based weakness.
Friday will see the release of Japan's consumer confidence index, Swiss retail sales, eurozone current account, U.K. ILO unemployment rate, eurozone inflation data, U.S. CPI, Canada's CPI and retail sales.
Dollar weakens on broad-based long liquidation
The single currency fluctuated wildly again on Thursday as the pair jumped to 1.0747 at Tokyo opening and then ratcheted lower to an intra-day low of 1.0625 but renewed buying quickly emerged again. Euro rose to 1.0768 after the release of U.S. jobless claims and then retreated to 1.0685 before rallying to 1.0818 after mixed comments about U.S. rate hike from U.S. Federal officials.
Vice Chair Stanley Fischer emphasized the determining role of data on the exact timing of a rate hike at some point later this year. But he gave no sense of when he thought that would be. Cleveland Fed President Loretta Mester said the Federal Reserve should begin a gradual series of interest rate hikes "relatively soon" as long as the economy rebounds from a soft first quarter, since the benefits of delaying are running thin.
Boston Federal Reserve President Eric Rosengren made it clear that he views the timing of a first rate hike as hardly imminent and said the U.S labor market needs to strengthen further and inflation needs to show signs of heading back up to 2 percent before the Federal Reserve will raise interest rates. Rosengren also said that given such lower normal long-run interest rates, central banks in developed countries may have set their inflation targets too low, making them more vulnerable to repeated bouts of near-zero interest rates. The Fed, which has kept rates near zero since December 2008, has an inflation target of 2 percent, as do several other major central banks.
U.S. Treasury's Lew, in meeting with Japanese finance minister Aso, highlighted importance of using all policy tools to support recovery, escape deflation in Japan. Lew told Aso it is critical for all countries to honor G7, G20 exchange rate commitments, including using domestic policy tools for domestic purposes and not targeting exchange rates. Lew and Aso shared views on importance of encouraging new multilateral institutions to complement, uphold high standards of existing institutions.
The greenback briefly dropped to 118.80 in Asian morning, however, short-covering above Wednesday's low at 118.79 lifted the pair to 119.47 and then fell again to 118.82 near NY close, however, trading was relatively thin as focus was on other dollar majors.
Cable moved closely with euro in Asia n European morning. Despite a brief rise to a fresh near 1-week peak at 1.4880 shortly after Asian open, price retreated to 1.4812 in European morning n then recovered to 1.4855 due to cross-buying in sterling vs euro and then dropped to 1.4812 again but only to rally to as high as 1.4970 near New York close due to dollar's broad-based weakness.
Friday will see the release of Japan's consumer confidence index, Swiss retail sales, eurozone current account, U.K. ILO unemployment rate, eurozone inflation data, U.S. CPI, Canada's CPI and retail 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.