Euro retreats on return of risk appetite: Jan 12, 2016

Market Review - 11/01/2016 22:46GMT   

Euro retreats on return of risk appetite

The single currency weakened against the greenback on Monday as market sentiment improved after PBOC set its midpoint for the yuan higher and as global stock markets gained.

Earlier in the day, euro rose to an intra-day high at 1.0970 ahead of Asian open on dollar's broad-based selloff. However, price pared its gains and retreated to 1.0872 in early European morning on improved risk appetite after China's central bank set a higher midpoint for yuan. Later, the single currency dropped further to session low at 1.0848 in New York due to the gains in global stock markets.

Versus the Japanese yen, the greenback briefly fell to session low at 116.69 in Australia on risk averse buying of yen. However, dollar pared its losses and gained to 117.45 in Asia and then rose to an intra-day high at 118.03 at New York open on improved risk sentiment. Later, renewed selling there pressured the pair lower and price retreated to 117.25 in New York morning.

The British pound spiked up to 1.4560 in tandem with euro ahead of Asian open and continued to ratchet higher and rose to an intra-day high at 1.4604 at New York open on improved risk appetite together with cross-selling of sterling vs euro. However, cable pared its gains and retreated to 1.4525 before recovering in New York afternoon.

In other news, Fed's Lockhart said 'inflation will by key to pace of further Fed rate hikes, need "hard evidence" that 2% target will be reached; U.S. economy could accelerate if global conditions, oil markets improve; Q4 data could look weak and reflect slow consumer spending, but he is mildly optimistic economy will continue to grow between 2% and 2.5%; expects U.S. economy to reach full employment this year.'

Data to be released on Tuesday:

Japan current account, trade balance, consumer confidence index, economy watchers poll, U.K. industrial production, ,manufacturing output, NIESR GDP estimate, U.S. business optimism index, Redbook and Canada manufacturing sales.