[B]Market Review [/B]- 27/03/2014 [I]18:46GMT [/I]
[B]Euro weakens after the release of U.S. growth and jobs data
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The single currency fell against the greenback on Thursday on cross-selling of euro versus sterling and on dollar’s strength after the release of U.S. data.
Despite trading sideways in Asia, the single currency met renewed selling interest at 1.3796 and dropped to 1.3741 in European morning, weighed down by cross-selling of euro versus sterling. Later, price recovered to 1.3779 in New York morning before falling again to an intra-day low at 1.3728 in New York midday. Euro then moved sideways for rest of the session.
Versus the Japanese yen, although the greenback spiked down to session low at 101.71 at Asian open, price rallied to 102.29 ahead of European open due to the rise in Nikkei-225 index. Dollar briefly retreated to 102.00 in European morning before rising to an intra-day high at 102.43 after the release of U.S. data. However, price pared intra-day gains and dropped to 101.99 on disappointing U.S. pending home sales report before recovering.
U.S. GDP annualized came in slightly below expectation at 2.6% vs forecast of 2.7%. Initial jobless claims fell to 311K fm prev. reading of 321K. In a separate report, U.S. pending home sales index dropped by 0.8% last month, disappointing expectations for a 0.3% gain.
Although the British pound remained under pressure and dropped to session low at 1.6555 in early European morning, price rallied swiftly 1.6640 after the release of better-than-expected UK retail sales. Cabled traded with a firm undertone and edged higher to an intra-day high at 1.6648 in New York morning before easing.
U.K. retail sales came in at 1.7% m/m and 3.7% y/y, much better than forecasts of 0.5% and 2.5% respectively.
In other news, BoE releases statement from March MPC meeting, which stated ‘risks from spikes in long-term interest rates and credit spreads at heart of FPC risk assessment; impact of tensions in Ukraine and China markets limited so far, but risk that markets not prepared for normal rates; notes increasing momentum in UK housing market, will be vigilant n take proportionate n graduated action if needed; UK banks will face extra stress test bases on house price fall n spike in interest rates as part of EU 2014 tests.’
Fed’s William Dudley said while explicit policy coordination among the world’s central banks is unfeasible, a more effective system should be developed to ensure they have access to foreign currency reserves in times of stress.
On the data front, France Consumer confidence comes in at 88, higher than forecast of 85.
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Data to be released on Friday: [/B]
Japan overall household spending, jobless rate, CPI, retail sales, France PPI, Italy PPI, U.K. Gfk consumer confidence, GDP, Lloyds business Barometer, current account, EU economic confidence, consumer confidence, business climate, Germany CPI, HICP, U.S. personal income, personal spending, PCE, university of Michigan consumer confidence.