Market Review - 16/04/2019 23:27GMT
Dollar gains due to rising U.S. yields, sterling falls on stall in Brexit talks
The greenback gained against majority of its peers in lackluster trading on Tuesday and ended the day higher due to rising U.S. Treasury yields and U.S. stocks. Elsewhere, euro dropped on dovish ECB news whilst sterling fell across the board after reports of a stall in Brexit talks between PM May and the opposition Labour party.
Versus the Japanese yen, although the greenback met renewed selling at 112.05 in Australia and dropped to session lows at 111.85 in European morning on cross-buying in jpy. However, price pared its losses and staged a rebound to 112.03 at New York open due to rising U.S. yields and later moved narrowly in subdued New York afternoon.
The single currency retreated to 1.1293 in Asian morning before rising to session highs at 1.1314 in early European morning. However, price erased its gains and dropped to an intra-day low at 1.1280 in Europe on dovish ECB news and later remained confined inside a narrow range in New York. Price last traded at 1.1280 near the close.
Reuters reported several European Central Bank policymakers think the bank's economic projections are too optimistic as growth weakness in China and trade tensions linger, four sources with direct knowledge of discussions said.
A "significant minority" of rate-setters in last week's policy meeting expressed doubt that a long projected growth recovery is coming in the second half of the year and some even questioned the accuracy of the ECB's projection models, given their long history of downward revisions, the sources said.
The British pound retreated in tandem with euro to 1.3080 in Asian morning before staging a recovery to 1.3098 at European open. However, cable met renewed selling there and dropped at New York open on a Guardian report that Brexit talks were stalled and hit session lows at 1.3043 in New York before stabilising.
Reuters reported Britain's opposition Labour Party denied a Guardian newspaper report on Tuesday that Brexit talks with Prime Minister Theresa May's government had stalled.
The newspaper had said talks had stalled due to a Conservative desire for post-Brexit deregulation including pursuing a U.S. trade deal. "There has to be access to European markets and above all there has to be a dynamic relationship to protect the conditions and rights that we've got for environment and consumer workplace rights," Corbyn said according to the Guardian.
In other news, Reuters reported it's up to Britain when it chooses to exit the European Union, the bloc's chief executive said on Tuesday, adding that it was not his working assumption that Brexit could be reversed or extended beyond a new Oct. 31 deadline.
The EU is on a break from Brexit and will focus on other policy matters, European Commission President Jean-Claude Juncker said in a speech on last week's Brexit summit to a plenary of the European Parliament in Strasbourg.
On the data front, U.S. manufacturing output was unchanged in March after two straight monthly declines, leading to the largest quarterly decrease in production since 2017.
The Federal Reserve said on Tuesday manufacturing production last month was restrained by weak motor vehicle output. Data for February was revised up to show output at factories falling 0.3 percent instead of declining 0.4 percent as previously reported.
Economists polled by Reuters had forecast manufacturing output edging up 0.1 percent in March.
Data to be released on Wednesday:
New Zealand CPI, Japan exports, imports, trade balance, industrial output, capacity utilization, China industrial output, retail sales, GDP, Italy consumer prices, trade balance, global EU current account, trade balance, HICP, UK CPI, RPI, PPI input prices, PPI output prices, U.S. MBA mortgage application, trade balance, wholesale sales, and Canada CPI, trade balance, exports, imports.
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