Dollar rebounds broadly on short covering after upbeat U.S. data: March 29, 2017

Market Review - 28/03/2017   22:22GMT  

Dollar rebounds broadly on short covering after upbeat U.S. data

The greenback pared its losses in New York session after dropping against majority of its peers earlier in the day on Tuesday as the aftereffects of Trump's healthcare bill rejection continue to linger. Stronger-than-expected U.S. consumer confidence and Richmond Fed manufacturing index also supported the greenback. 

Versus the Japanese yen, dollar met renewed selling at 110.83 in Australia and retreated to 110.52 in Asia. Intra-day decline accelerated in Europe and price dropped to an intra-day low at 110.18 on the greenback's broad-based weakness, however, price pared its losses after release of upbeat U.S. data and later rallied strongly to session highs of 111.19 due to broad-based usd gain. 

The single currency traded in a narrow range in Asia before briefly dropping to 1.0846 in European morning. Later, euro found some support there and staged a rebound to 1.0872 in New York morning before falling again as upbeat U.S. data lifted the greenback broadly, the single currency later tumbled to session lwos of 1.0799 before staging a minor recovery near the close.

Despite staging a rebound from European low at 1.2539 to session high at 1.2597 in European morning, the British pound pared its gains and tumbled to as low as 1.2442 in New York afternoon on active cross-selling of sterling especially versus euro as investors remained cautious ahead of triggering Article 50 on Wednesday and after news that Scottish Parliament voted in favour of another referendum. 

Scottish Parliament votes in favour of BID to hold independence referendum between Autumn 2018 n Spring 2019. 

In other news, BoE's McCafferty said 'we will be raising interest rates as soon as economy is strg enough, that is not now; whether economy stays as strg as it is, is an open question as inflation is pikcing up; I'd be very surprised if no acceptable deal is reached with the EU; no deal with the EU wud probably lead to a couple of years of economy performing badly; not clear to me that U.S. stock mkt is so overvalued that it will cause major problems; rising inflation will put a crimp on UK consumer purchasing power; growth in UK likely to become anaemic rather than enter a recession; does not expect uncertainty to dissipate soon, but having less impact than previously feared.' 

On the data front, the Conference Board, a market research group, said its index of consumer confidence for the U.S. jumped to 125.6 this month from a reading of 116.1 (revised from an initial 114.8) in February. That was its highest level since December 2000. Analysts had expected the index to fall to 114.0 in February. 

Data to be released on Wednesday: 

Japan retail sales, UK house prices, mortgage approvals, Italy business confidence, consumer confidence, U.S. wage inflation and pending home sales.