Market Review - 29/03/2019 00:08GMT
Dollar broadly higher on rising yields, sterling tumbles on Brexit concerns
The greenback ended higher across the board on Thursday on concerns of a slowdown in the global economy together with a strong rebound in U.S. Treasury yields. The British pound fell to a 6-day low on renewed Brexit concerns that UK PM May's withdrawal deal would not be passed in parliament. Euro also took a beating and dropped to a near 3-week low on signs that ECB will keep interest rates low for a longer period of time.
Versus the Japanese yen, although dollar fell from 110.53 in Australia to 110.12 in Asian morning on selloff in Nikkei-225 (ended down 344 points or -1.61%), and then ratcheted lower to session lows at 110.02 at European open, price found renewed buying and rallied to an intra-day high at 110.83 in New York morning on broad-based usd's strength due to a strong recovery in U.S. Treasury yields before retreating.
The single currency edged up to 1.1262 in Asia and then fell in tandem with sterling to 1.1234 in European morning. Despite rebounding to 1.1258, broad-based usd's strength knocked price down to a near 3-week low of 1.1214 in New York morning before recovering.
The British pound went through a volatile session. Cable initially fell to 1.3143 in Australia after Northern Irish DUP said it would not support the PM's deal. Despite staging a rebound to 1.3198 in Asia, price dropped to 1.3126 in European morning and then fell further to a 6-day low at 1.3035 in New York on dollar's strength and as a UK source said that Brexit vote on Friday would not be a meaningful one.
Reuters reported the Northern Irish party which props up Prime Minister Theresa May's government said on Wednesday it would vote against her deal, rejecting earlier media reports that it might abstain.
Britain's opposition Labour Party will not support Prime Minister Theresa May's Brexit deal if she asks parliament to vote on just the divorce element without the agreement on the future relationship, its Brexit spokesman will say on Thursday.
In other news, Reuters reported Boris Johnson, who led the campaign to leave the European Union, said Prime Minister Theresa May's twice-defeated Brexit divorce deal is dead, the Evening Standard newspaper said on Thursday.
"Boris: May's deal is dead," the newspaper said on its front page, Johnson, who fell in behind the deal after May promised to quit if it was passed, had told friends: "It's dead anyway."
On the data front, Reuters reported the U.S. economy slowed more than initially thought in the fourth quarter, keeping growth in 2018 below the Trump administration's 3 percent annual target, and corporate profits failed to rise for the first time in more than two years. Gross domestic product increased at a 2.2 percent annualized rate, the Commerce Department said on Thursday in its third reading of fourth-quarter GDP growth. That was down from the 2.6 percent pace estimated in February.
Economists polled by Reuters had forecast GDP in the fourth quarter being revised down to a 2.4 percent.
Data to be released on Friday :
New Zealand building permits, Japan Tokyo CPI, unemployment rate, industrial output, retail sales, construction order, housing starts, UK GfK consumer confidence, nationwide house price, GDP, current account, Germany import prices, retail sales, unemployment change, unemployment rate, France consumer spending, CPI, Swiss KOF indicator, Italy consumer prices, producer prices, U.S. building permits, personal income, personal spending, PCE, Chicago PMI, University of Michigan sentiment, new home sales, and Canada GDP, producer prices.
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