[B]Market Review[/B] - 10/04/2014 [I]22:44GMT [/I]
[B]U.S. dollar continues to weaken broadly on Thursday after Wednesday’s dovish FOMC minutes[/B]
U.S. dollar dropped to three-week lows of 101.33 and 0.8749 against the Japanese yen and the Swiss franc respectively on Thursday after Wednesday’s release of dovish minutes of the Federal Reserve’s March meeting.
Despite staging a brief bounce to 102.14 in Asian morning on Thursday on short-covering, U.S. dollar weakened again in European session and fell briefly below Wednesday’s low of 101.55 to 101.45 before trimming losses after the release of better-than-expected U.S. weekly jobless claims which fell to a seven-year low of 300,000, lower than the consensus forecast of 320,000. However, renewed selling interest quickly emerged at 101.97 due to renewed selloff in global stock markets. Dow Jones index dropped by more 200 points. U.S. dollar later dropped to a session low of 101.33.
Despite extending Wednesday’s rally to 1.3871 in Asian morning on Thursday, following the release of dovish FOMC minutes, profit-taking below previous res at 1.3877 pressured price to 1.3836 in European morning before rebounding. The single currency later rose to an intra-day high of 1.3900 in New York due to renewed selling in U.S. stock markets.
The British pound extended Wednesday’s rally to an intra-day high of 1.6821 in Asian morning on Thursday, however, profit-taking offers below Feb’s 4-year peak of 1.6823 knocked price lower to 1.6754 b4 rebounding in New York in tandem with euro after the release of less-than-expected U.S. jobless claims. Bank of England kept its benchmark rate and QE total unchanged at 0.50% n 375 billion sterling respectively.
Bundesbank chief Jens Weidmann reiterated on Thursday that if there is a prolonged period of low inflation, the ECB will consider unconventional instruments. Last week, ECB chief Mario Draghi flagged the chances of quantitative easing.
In other news, IMF said ‘unwinding large central bank balance sheets will be complex, could risk large spillovers via market n exchange rate volatility; calls for more cooperation between central banks and financial regulators; major emerging markets see room for more cooperation on spillovers from monetary policy; advanced economies shud calibrate pace of austerity to support recovery; reform fatigue could push global economy into prolonged slump.’
[B]Friday [/B]will see the release of Japan domestic CGPI, China PPI, CPI , Germany CPI, HICP, France current account, U.S. PPI and U.S. University of Michigan consumer confidence.