[B]Market Review [/B]- 31/03/2014 22:53GMT
[B]Dollar pares initial gains on dovish comments from Fed’s Chair Janet Yellen[/B]
The greenback pared its initial gains after comments from Federal Reserve Chair Janet Yellen created some uncertainty surrounding the central bank’s plans to further cut its stimulus measures.
Fed Chair Janet Yellen said ‘extraordinary commitment to stimulus will be needed for some time, a view widely shared by fellow policymakers; economy still considerably short of Fed’s goals; will take time to reach; considerable slack remains in economy, labor market; cuts to bond buying not a lessening of commitment, but reflection of some labor market progress; QE cuts show aid for the recovery need not grow as quickly; labor market slack has held down compensation; recovery still feels like a recession to many Americans.’
Versus the Japanese yen, although the greenback traded sideways in Asia, price rallied in European morning on cross-selling of jpy especially versus euro. Dollar eventually hit session high at 103.44 in New York morning, however, comments from Fed’s Yellen triggered broad-based weakness in usd and the pair dropped to 102.90.
Despite trading sideways in Asia, the single currency fell briefly but sharply to session low at 1.3722 in European morning after the release of weaker-than-expected EU inflation data. However, euro swiftly pared its losses and rallied to an intra-day high at 1.3810 in New York morning before retreating to 1.3763.
Euro zone CPI in Mar came in at 0.5%, lower than the forecast of 0.6%.
The British pound also traded sideways in Asia and edged higher to 1.6656 in European morning before falling to session low at 1.6613 in New York morning. However, cable pared its losses and rose to an intra-day high at 1.6684 on cross-buying of sterling versus euro together with dollar’s weakness.
In other news, BoJ Governor Haruhiko Kuroda said ‘BOJ easing aimed at ending 15 years of deflation; Japan long-term yields are stable and low; Japan economy continues moderate recovery; too early to discuss QE exit policy; discussing exit policy too soon could cause confusion; should discuss exit specifics only after reaching 2%; must consider state of economy, markets when exiting.’
On the data front, U.S. Chicago PMI comes in weaker-than-expected at 55.9 vs forecast of 59.0. U.K. Feb mortgage approvals came in at 70.3K, lower than the forecast of 75.3K, previous reading is revised to 76.8K.
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Data to be released on Tuesday: [/B]
Australia Rate decision, Japan Tankan large manufacturing index, Tankan non-manufacturing index, China manufacturing PMI, HSBC manufacturing PMI, Swiss manufacturing PMI, Italy manufacturing PMI, unemployment rate, France manufacturing PMI, Germany manufacturing PMI, unemployment change, unemployment rate, EU manufacturing PMI, unemployment rate, U.K. manufacturing PMI, U.S. Markit PMI, ISM manufacturing, construction spending.