Market Review - 14/03/2018 01:35GMT
Dollar falls broadly after Trump fires Sec. of State Tillerson
Despite the greenback's broad-based strength in Asia, dollar briefly climbed to sessions highs after release of in-line U.S. inflation data but price swiftly erased intra-day gains and tumbled on news that U.S. President Donald Trump had ousted Secretary of State Rex Tillerson.
The U.S. Labor Department said its consumer price index increased 0.2% last month. In the 12 months through February, the CPI rose 2.2%. Both readings were in line with consensus.
Reuters reported U.S. President Donald Trump on Tuesday said he had replaced U.S. Secretary of State Rex Tillerson with Central Intelligence Agency Director Mike Pompeo, and had tapped Gina Haspel to lead the CIA.
Versus the Japanese yen, although dollar initially dipped to 106.25 at Asian open on news that Japan Finance Minister Aso is considering to skip G20 meeting, price met renewed buying and rose steadily to session highs of 107.29 at New York open. However, price tumbled to 106.72 in New York on Tillerosn's firing which led to broad-based usd's weakness and despite s short-covering bounce to 107.11, dlr resumed intra-day decline and hit session lows 106.46.
Reuters reported Japan's Finance Minister is considering skipping a Group of 20 finance leaders' gathering in Buenos Aires next week, Japanese media reported, as a suspected cover-up of a cronyism scandal paralyses parliament and puts his job on the line.
Although the single currency remained under pressure in Asia and fell to intra-day low of 1.2315 at European morning. However, euro erased intra-day losses and rallied to 1.23850 after the Tillerson's news, price later ratcheted higher to session highs of 1.2407 before easing.
The British pound went through a volatile session. Despite falling initially to 1.3875 in European morning, price erased intra-day losses and rallied to 1.3962 on broad-based usd's weakness and UK's budget report including trimming in budget deficit. Cable later climbed to session highs of 1.3994 before retreating.
Reuters news, UK Finance Minister Philip Hammond said; 'OBR forecasts show 2017/18 budget deficit of 2.2 pct of GDP (Nov 2.4 pct); OBR forecasts show 2018/19 budget deficit of 1.8 pct of GDP (Nov 1.9 pct); OBR forecasts show 2019/20 budget deficit of 1.6 pct of GDP (Nov 1.6 pct); OBR forecasts show 2020/21 budget deficit of 1.3 pct of GDP (Nov 1.5 pct); OBR forecasts show 2021/22 budget deficit of 1.1 pct of GDP (Nov 1.3 pct).'
The Office for Budget Responsibility also said the British current account deficit remained large and was likely to fall only slowly, leaving the country vulnerable to a drop in investor confidence if there were a disorderly Brexit.
The economy was growing faster than its long-run potential, adding to inflation pressure, the OBR added.
In other news, Reuters reported Britain's government budget watchdog said on Tuesday it estimated the cost of settling Britain's outstanding liabilities to the European Union would be 37.1 billion pounds ($51.8 billion), three quarters of which would fall due in the next five years.
On the data front, the so-called core CPI increased by 0.2% from a month earlier and rose 1.8% in the 12 months through February. Those readings also matched economists' forecast.
Data to be released on Wednesday:
New Zealand current account, Australia consumer sentiment, Japan machinary orders, China industrial output, retail sales, Germany CPI, HICP, Italy retail sales, EU industrial production, and U.S. MBA mortgage application, PPI, core PPI, retail sales, retail sales ex-autos, business inventories
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