Dollar pares losses after volatile session as the Dow stages a late rally after intra-day selloff

Market Review - 07/12/2018  00:17GMT  

Dollar pares losses after volatile session as the Dow stages a late rally after intra-day selloff

The greenback remained under against its G4 peers due to selloff in global equities together with falling U.S. Treasury yields and downbeat U.S. ADP employment dataas. The Dow opened lower after U.S. markets were closed on Wednesday and tumbled 780 points but then staged a late rally on report Fed may pause hikes.   
  
U.S. stocks pared intra-day steep losses and ended the day well off their session lows after the Wall Street Journal reported Fed is considering whether to signal a wait-and-see approach to rate hikes at its upcoming meeting this month. The report also said Fed officials do not know what their next move on rates will be after December.  
  
U.S. private employers added 179,000 jobs in November, below economists' expectations, a report by a payrolls processor ADP showed on Thursday. Economists had expected the ADP nonfarm payrolls report to show a gain of 195,000 jobs after adding 225,000 jobs in the previous month.  
  
Versus the Japanese yen, dollar initially fell from 113.20 in Australia and 112.58 in Asia on selling in Asian equities together with renewed trade concern between U.S-China after top executive of Huawei was arrested in Canada and despite rebounding to 113.15 at European open, price met renewed selling and intra-day fall accelerated at New York open and later tumbled to a 1-month low of 112.24 due to selloff in U.S. stock markets as well as U.S. Treasury yields, however, a late rally in the Dow prompted short covering and the pair recovered to 112.75.  
  
Reuters reported China's embassy in Canada criticised Canada and the United States on Thursday for wrongfully arresting a senior executive at Chinese telecoms giant Huawei and demanded her immediate release.   
  
Meng Wanzhou, Huawei's global chief financial officer, is facing extradition to the United States and her arrest could rekindle tensions between Washington and Beijing only days after they agreed to a ceasefire in a bitter trade war.   
  
Although the single currency moved narrowly in Asia then fell to 1.1321 in European morning, renewed buying emerged and price began to rally at New York open and later hit session highs at 1.1412 on selloff in U.S. equities and downbeat U.S. ADP employment data before retreating to 1.1359 on profit-taking as the greenback rebounded in tandem with U.S. stocks.  
  
Reuters reported Italy's government is on the right track as it works on new budget numbers but needs to make "an extra effort", European Economics Commissioner Pierre Moscovici said on Thursday.   
  
The British pound went through a volatile session. Although cable traded sideways in Asia and briefly fell to 1.2699 in European morning, price found renewed buying and rose steadily in tandem with euro to session highs at 1.2813 (Reuters) in New York on dollar's weakness before retreating.  
  
In other news, Reuters reported the Brexit deal which Prime Minister Theresa May wants to get through the British parliament next week is the best Britain will get to arrange its orderly withdrawal from the EU, EU negotiator Michel Barnier said on Thursday.  
  
On the data front, The Institute of Supply Management said its non-manufacturing purchasing managers' index rose to 60.7 in November, from 60.3 the previous month. Economists had forecast a reading of 59.2.  
  
Data to be released on Friday :    
Australia AIG construction index, Japan household spending, coincident index, leading indicator, Germany industrial output, France industrial output, trade balance, import, export, U.K. Halifax house prices, Italy retail sales, EU GDP revised, Canada employment change, unemployment rate and U.S. non-farm payrolls, private payrolls, unemployment rate, average earning, University of Michigan sentiment prelim, wholesale inventories, wholesale.