Market Review - 27/01/2016 20:20GMT
The greenback weakens versus other major currencies after unchanged Fed's rate decision
U.S. dollar weakened versus other major currencies after the Federal Reserve kept interest rates unchanged at 0.25-0.50% on Wednesday. Fed said it was "closely monitoring" global economic and financial developments, but maintained an otherwise upbeat view of the U.S. economy.
The Federal Reserve said in the monetary policy statement, 'removes reference in statement that risks to outlook are balanced; closely watching global economic and financial developments to assess balance of risks to the U.S. economic outlook; still expects effects of energy decline and strong dollar to prove transitory, allowing inflation to rise in the medium term; labor market improved even as economic growth slowed late last year; underutilization of labor resources continues to decline and labor market should continue to strengthen; with gradual adjustments to monetary policy, economic activity will expand at moderate pace; expects economic conditions will evolve in way that warrants "only gradual increases" in fed funds rate; anticipates keeping existing policy of reinvesting principal payments until normalization of rates is "well under way"; when determining timing, size of future changes in rates it will assess realized and expected conditions relative to employment, inflation objectives.'
Versus the Japanese yen, although dollar retreated to 118.04 in Asia, intra-day rally in Asian stocks lifted price to 118.50 before retreating to 118.07 in European morning, however, price regained support due to active cross-selling in yen on improved risk appetite and rallied to 119.00 in New York midday after release of upbeat U.S. housing data. Later, price briefly rose to a fresh session high of 119.07 following the release of unchanged Fed's rate decision before retreating to 118.50.
The U.S. Commerce Department said on Wednesday that new home sales rose by 10.8% to 544,000 units last in December, compared to expectations for a gain of 2.0% to 500,000.New home sales in November were revised up to 491,000 units from a previously reported 490,000 units.
The single currency found support at 1.0851 in Asia and rose to 1.0882 in European morning, then 1.0912 in New York morning before retreating. Later, price briefly dipped to 1.0860 after unchanged Fed's rate decision and then jumped to 1.0916 near New York closing.
In European morning, research group Gfk showed consumer climate remained in Germany unchanged in February. It said that its index of Germany's consumer climate remained unchanged at 9.4, from 9.4 in the preceding month. Market had expected the index to tick down to 9.3.
The British pound weakened against the greenback on Wednesday. During the day, although price moved sideways in a relatively narrow range of 1.4230-1.4251 in Asia, cable retreated in Europe and fell to 1.4285 before staging a rebound to 1.4355. However, renewed cross-selling in sterling checked intra-day gain there and price later tumbled to 1.4230 in New York morning before moving sideways.
In other news, Reserve Bnak of New Zealand kept overnight deposit rate unchanged at 2.5% and said in the statement, 'further easing may be needed over coming year; further easing may be needed; inflation expected to take longer to reach target range; watching data closely; many risks around outlook; risks include housing market pressures; further fall in NZD appropriate; Auckland house price inflation remains a stability risk.'
Data to be released on Thursday:
New Zealand exports, imports, trade balance, Japan retail trade, Australia import price index, export price index, Italy wage inflation, U.K. GDP, CBI distributive trade, Euro zone services sentiment, consumer confidence, industrial confidence, economic sentiment indicator, business climate, Germany CPI, Harmonised Index of Consumer Prices, U.S. initial jobless claims, durable goods and pending home sales.
The greenback weakens versus other major currencies after unchanged Fed's rate decision
U.S. dollar weakened versus other major currencies after the Federal Reserve kept interest rates unchanged at 0.25-0.50% on Wednesday. Fed said it was "closely monitoring" global economic and financial developments, but maintained an otherwise upbeat view of the U.S. economy.
The Federal Reserve said in the monetary policy statement, 'removes reference in statement that risks to outlook are balanced; closely watching global economic and financial developments to assess balance of risks to the U.S. economic outlook; still expects effects of energy decline and strong dollar to prove transitory, allowing inflation to rise in the medium term; labor market improved even as economic growth slowed late last year; underutilization of labor resources continues to decline and labor market should continue to strengthen; with gradual adjustments to monetary policy, economic activity will expand at moderate pace; expects economic conditions will evolve in way that warrants "only gradual increases" in fed funds rate; anticipates keeping existing policy of reinvesting principal payments until normalization of rates is "well under way"; when determining timing, size of future changes in rates it will assess realized and expected conditions relative to employment, inflation objectives.'
Versus the Japanese yen, although dollar retreated to 118.04 in Asia, intra-day rally in Asian stocks lifted price to 118.50 before retreating to 118.07 in European morning, however, price regained support due to active cross-selling in yen on improved risk appetite and rallied to 119.00 in New York midday after release of upbeat U.S. housing data. Later, price briefly rose to a fresh session high of 119.07 following the release of unchanged Fed's rate decision before retreating to 118.50.
The U.S. Commerce Department said on Wednesday that new home sales rose by 10.8% to 544,000 units last in December, compared to expectations for a gain of 2.0% to 500,000.New home sales in November were revised up to 491,000 units from a previously reported 490,000 units.
The single currency found support at 1.0851 in Asia and rose to 1.0882 in European morning, then 1.0912 in New York morning before retreating. Later, price briefly dipped to 1.0860 after unchanged Fed's rate decision and then jumped to 1.0916 near New York closing.
In European morning, research group Gfk showed consumer climate remained in Germany unchanged in February. It said that its index of Germany's consumer climate remained unchanged at 9.4, from 9.4 in the preceding month. Market had expected the index to tick down to 9.3.
The British pound weakened against the greenback on Wednesday. During the day, although price moved sideways in a relatively narrow range of 1.4230-1.4251 in Asia, cable retreated in Europe and fell to 1.4285 before staging a rebound to 1.4355. However, renewed cross-selling in sterling checked intra-day gain there and price later tumbled to 1.4230 in New York morning before moving sideways.
In other news, Reserve Bnak of New Zealand kept overnight deposit rate unchanged at 2.5% and said in the statement, 'further easing may be needed over coming year; further easing may be needed; inflation expected to take longer to reach target range; watching data closely; many risks around outlook; risks include housing market pressures; further fall in NZD appropriate; Auckland house price inflation remains a stability risk.'
Data to be released on Thursday:
New Zealand exports, imports, trade balance, Japan retail trade, Australia import price index, export price index, Italy wage inflation, U.K. GDP, CBI distributive trade, Euro zone services sentiment, consumer confidence, industrial confidence, economic sentiment indicator, business climate, Germany CPI, Harmonised Index of Consumer Prices, U.S. initial jobless claims, durable goods and pending home sales.
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