[B]Market Review [/B]- 08/04/2014 [I]18:08GMT[/I]
[B]Japanese yen rallies broadly as Bank of Japan refrains from adding to stimulus[/B]
Versus the Japanese yen, the greenback retreated to 102.74 in Asian morning before staging a brief rebound to 103.06 after BoJ’s decision to keep its rate unchanged at 0.1%. However, renewed selling quickly emerged there as the central bank refrained from additional easing and price dropped further after Governor Haruhiko Kuroda offered little indication that more stimulus was likely in the short term. Dollar eventually tumbled to an intra-day low at 101.55 in New York afternoon.
BoJ Governor Kuroda said ‘positive cycle in works in economy driven by robust domestic demand; monetary policy must be flexible so not saying we will never take additional easing steps; what we’re saying is that we see no need to ease now judging from current economy, near-term outlook; absolutiely not thinking of early reversal of QE as see no upside, downside risks materializing.’
The single currency gained against the greenback on Tuesday on dollar’s broad-based weakness together with IMF’s upgrade of the region’s growth forecast.
Earlier in the day, euro traded sideways in Asia and found renewed buying at 1.3737 at European open and gained to 1.3774 in European morning due to the rally in gbp/usd. Price rose to an intra-day high at 1.3811 in New York morning as IMF upgraded the growth outlook of the region.
IMF sees Eurozone growth at 1.2% this year vs 1% forecasted in January.
The British pound traded in a narrow range in Asia before rallying to 1.6713 in early European morning after the release of better-than-expected UK industrial and manufacturing production data. Cable continued to trade with a firm undertone and rose to an intra-day high at 1.6755 in New York morning after IMF upgraded UK’s growth forecast for the year.
U.K. Feb industrial production came in at 0.9% m/m n 2.7% y/y, stronger than the forecast of 0.3% n 2.2% respectively.
U.K. Feb manufacturing production came in at 1.0% m/m n 3.8% y/y, higher than the expectation of 0.3% n 3.1% respectively.
IMF hiked Britain’s growth forecast to 2.9% this year from 2.4% previously.
In other news, Bundesbank said ‘acknowledges IMF recommendations on monetary policy; notes ECB is monitoring inflation developments closely; Eurozone monetary policy already very accommodative; shud inflation stay low for too long, ECB has necessary instruments to act; however, the possible risks of a long-lasting low interest rate phase must be weighed; IMF/G20 meetings to address geopolitical uncertainties n their impact on global growth; IMF/G20 will also discuss normalization of U.S. monetary policy n impact on global economy; risks to world economy come fm geopolitical developments, finance conditions in some emerging economies.’
On the data front, Japan Mar Eco watchers survey came in at 57.9, better than the forecast of 53.3.
[B]Data to be released on Wednesday:[/B]
Australia consumer confidence, home loans, U.K. shop price index, trade balance, Germany export, import, trade balance wholesale inventories, wholesale sales and FOMC minutes.