Dollar ends mixed, yen and chf gain after terror attack in Barcelona: Aug 18, 2017

Market Review - 17/08/2017  22:39GMT  

Dollar ends mixed, yen and chf gain after terror attack in Barcelona

The greenback traded mixed against its peers on Thursday after initial strength in Europe and early New York trading, however, dollar fell on market rumours of National Economic Council Director Gary Cohn had resigned but was later denied. Later, dollar fell further on safe=haven buying of yen and Swiss franc after news of terror attack in Barcelona. Earlier at European midday, the single currency tumbled broadly and weakened to a 3-week low against the usd to 1.1663 after the release of ECB meeting minutes.

White House official said 'White House economic adviser Cohn intends to remain in his position as NEC Director... nothing's changed.'

Reuters reported a manhunt is underway for the driver of a van that mowed through crowds of tourists on Barcelona's most famous avenue on Thursday, killing at least 13 people in an attack that was claimed by Islamic State. Authorities said the death toll could rise, with more than 100 people injured, some seriously.

Versus the Japanese yen, dollar found renewed buying at 109.67 in Asia and climbed to 110.07 in European morning, price hit session highs of 110.37 ahead of New York open. Later, the greenback tumbled to session low at 109.63 in New York morning on rumours that Cohn was resigning but price pared its losses after these rumours were denied and rebounded to 110.03, price later fell to 109.43 on safe-haven buying of yen on news report of terror attack in Barcelona.

Despite edging up to 1.1790 in Asian morning, the single currency tumbled in European session on cross-selling of euro especially vs sterling and briefly tanking briefly to a 3-week trough of 1.1663 ahead of New York open after ECB's meeting minutes showed policymakers were worried about an overshoot in the euro. However, the pair turned positive on short covering and rebounded strongly to 1.1753 in New York trading before moving narrowly in New York afternoon.

ECB meeting minutes stated 'rate-setters expressed concerns about possible mkt overshooting, notably in forex at Jul 20 meeting; still favourable financing conditions could not be taken for granted, relied to great extent on policy; accommodation determined by all tools, not just duration and pace of APP; stock vs flow aspect of APP should be considered; there is risk that financial conditions could tighten to unwarranted degree; it needs to gain more space and flexibility to adjust policy and accommodation in either direction if needed; a suggestion was made that consideration be given to adjustment in language; it was generally judged paramount to avoid signals that might prove premature, be prone to over-interpretation; a remark was made that expansion was increasingly self-sustaining; headline inflation slightly lower than previously expected due to oil, exchange rates; more favourable growth outlook increases confidence that inflation will gradually converge to target.'

Although the British pound edged up to 1.2909 in Asia and traded sideways in Europe. Price briefly jumped to 1.2913 (Reuters) after U.K. retail sales n retreated in tandem with euro to a session lows of 1.2853 ahead of New York open. However, cable pared intra-day losses and rebounded to 1.2900 in New York morning before retreating.

In other news, British PM May said 'a lot to be done in Brexit talks with the EU.'

On the data front, the number of individuals filing for initial jobless benefits in the week ending August 12 decreased by 12,000 to a seasonally adjusted 232,000 from the previous week's total of 244,000, the U.S. Department of Labor said. Analysts expected jobless claims to fall by 4,000 to 240,000 last week. 

Data to be released on Friday:

China house price index, Germany PPI, EU current account, construction output, Canada retail sales, CPI, core CPI, and U.S. university of Michigan sentiment.