Market Review - 11/10/2018 01:01GMT
Dollar falls vs G4 currencies on drop in U.S. yields due to selloff in the Dow
The greenback gave up early gains made in Asia and European morning and tumbled against its G4 peers on Wednesday due to sharp retreat in U.S. Treasury yields as a 3%-plus drop in the Dow triggered safe-haven yen buying and U.S. treasuries. The British pound and euro rose on continued Brexit deal optimism following comments from EU's Brexit negotiator Barnier.
Versus the Japanese yen, although dollar rose from 112.93 at Asian open to 113.29 in Europe on usd's strength, price erased intra-day gains and fell to +session lows at 112.61 in New York due to sharp retreat in U.S. Treasury yields, intra-day decline later gathered momentum on selloff in U.S. stocks, price later hit session lwos of 112.26 and closed at the day's low.
The single currency went through a roller-coaster ride. Although price gained to 1.1515 in Asian morning, price fell to session lows at 1.1480 in Europe on potential downgrade of the Italian debt, however, euro erased its losses and rose in tandem with sterling to intra-day high of 1.1545 in New York on usd's weakness before retreating on profit taking.
Reuters reported a downgrade of the Italian debt by credit rating agencies is possible, a prominent lawmaker of the ruling League party said on Wednesday, as market concern over the financial sustainability of the new government budget targets mounted.
The British pound also went through a volatile session. Although cable traded with a firm bias and rose to 1.3186 (Reuters) in European morning, price fell in tandem with euro to 1.3136 on soft UK GDP data, however, the pound erased its losses and rallied to session highs of 1.3216 in New York on Brexit deal optimism after EU Brexit negotiator Michel Barnier said 80-85 percent of the withdrawal deal was agreed.
Month-on-month, UK GDP was flat, falling short of forecasts for an expansion of 0.1%, but growth in the previous month was revised up to 0.4% from a previously reported 0.1%.
In other news, Reuters reported the European Union wants to carry out Irish border checks after Brexit "in the least intrusive way possible" but veterinary and phytosanitary controls will have to take place at the border, the bloc's Brexit negotiator Michel Barnier said on Wednesday.
On the data front, the U.S. Labor Department said its producer price index (PPI) increased 0.2% last month. In the 12 months through September, the PPI rose 2.6%. Economists had forecast the PPI rising 0.2% last month and increasing 2.8% from a year ago.
The so-called core PPI increased by 0.2% from a month earlier and rose 2.5% in the 12 months through September. Those numbers matched market expectations.
Data to be released on Thursday :
UK RICS houseing price balance, Japan domestic CGPI, France CPI, U.S. initial jobless claims, CPI, core CPI, real weekly earnings, and Canada new housing price index.
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