Market Review - 21/04/2018 04:40GMT
Dollar extends gains on short covering and rising U.S. yields, sterling weakens further on long liquidation
The greenback continued this week's gain and was higher across the board on Friday on the back of rising U.S. Treasury yields and investors' optimism of multiple rate hikes from Fed this year. The British pound remained under pressure on broad-based long liquidation in sterling esp. versus usd, yen and the euro as expectations that UK will raise interest rate in May has dramatically dropped after slew of of weaker-than-expected U.K. data and Bank of England Governor Mark Carney's dovish comments on Thursday.
Versus the Japanese yen, dollar traded with a firm bias in Asia and rose to 107.73 before retreating to 107.49 in European morning. However, price found renewed buying there and climbed steadily to a near 2-month high of 107.86 in New York on rising U.S. Treasury yields before retreating to 107.51 due partly to weakness in U.S. stocks.
Despite edging up to 1.2353 in European morning, the single currency met renewed selling and tumbled to 1.2294, then ratcheted lower to session lows of 1.2250 in New York on cross-selling in euro and broad-based usd's strength before rebounding to 1.2300 on short-covering, price last traded at 1.2289 near the close.
The British pound continued this week's losing streak and remained under pressure following Bank of England Mark Carney's dovish comments on Thursday and fell to 1.4036 in European morning before rebounding to 1.4081. However, broad-based dollar's strength knocked price to session lows of 1.3985 at New York close.
Reuters reported expectations of a UK interest rate increase in May has shrunk to around 40 percent from 70 percent earlier this week after Bank of England Governor Mark Carney dampened widespread expectations of a hike next month.
In other news, Reuters reported Prime Minister Theresa May is confident Britain and the EU can find a solution to avoid any return to a hard border with Ireland after Brexit, her spokesman said on Friday, saying he did not recognise reports that the bloc had rejected her plans.
On the data front, the European Commission said a flash estimate showed euro zone consumer morale rose to 0.4 in April from 0.1 in March, without providing details on what caused this rise. Analysts polled by Reuters had on average expected consumer confidence to fall to -0.2.
Data to be released thisweek :
Japan Nikkei manufacturing PMI, all industry activity, France Markit manufacturing PMI, Markit services PMI, Germany Markit manufacturing PMI, Markit services PMI, EU Markit manufacturing PMI, Markit services PMI, Canada wholesale sales, and U.S. national activity index, Markit manufacturing PMI, Markit services PMI, existing home sales on Monday
Australia CPI, Japan leading economic index, coincident index, Swiss trade balance, export, import, France business climate, Germany Ifo business climate, current conditions, expectations, Italy business confidence, consumer confidence, trade balance non-EU, U.K. PSNB, PSNCR, CBI industrial trends survey, and U.S. building permits, redbook, monthly home price, Case-Shiller home price, consumer confidence, new home sales, Richmond Fed manufacturing on Tuesday
New Zealand market holiday, Australia market holiday, France consumer confidence, Swiss ZEW investor sentiment, and U.S. MBA mortgage application on Wednesday
Australia exports, imports, Germany Gfk consumer confidence, U.K. BBA mortgage approvals, CBI distributive trades, EU ECB interest rate decision, deposit rate decision, and U.S. durable goods, durables ex-transportation, durables ex-defence, goods trade balance, wholesale inventories, initial jobless claims, Kansas Fed manufacturing activity on Thursday
New Zealand imports, trade balance, exports, Japan Tokyo core CPI, Tokyo CPI, unemployment rate, industrial production, retail sales, BoJ interest rate decision, construction orders housing starts, Australia PPI, France GDP preliminary, consumer spending, CPI (EU norm), producer prices, Germany unemployment change, unemployment rate, Italy producer prices, U.K. GDP, EU business climate, economic sentiment, industrial sentiment, services sentiment, consumer confidence, U.S. GDP annualized, GDP deflator, core PCE price, PCE price, labor costs, University of Michigan sentiment, and Canada budget balance on Friday
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