[B]Market Review[/B] - 15/08/2013 [I]22:16GMT[/I]
[B]Dollar drops broadly on weak Philadelphia Fed index[/B]
The greenback surrendered gains versus other major currencies on Thursday as the weaker-than-expected U.S. Philadelphia Fed business condition conflicted with the upbeat jobless claims, muddying the expectations about the withdrawal of the stimulus measures from the Federal Reserve.
Although the single currency rose briefly but strongly to 1.3311 in Asian morning on short-covering and then traded narrowly in European session, the pair fell sharply after the release of better-than-expected U.S. jobless claims (320K versus the forecast of 335K) and then weakened to 1.3206 in New York morning, however, dollar’s broad-based weakness due to the disappointing Philadelphia Fed business condition (9.3 versus the expectation of 15.0) prompted the pair to rally sharply higher later in the day and euro climbed back above 1.3300 level to a fresh session high of 1.3363 before easing.
Versus the yen, dollar went through a roller-coaster session on Thursday. Despite a brief but strong rise to 98.30 in Asian morning due to the comments from Japan Finance Minister Aso about corporate tax cut, renewed selling interest pressured the pair to 97.59 near Toyko afternoon. Later, although cross selling of yen versus euro lifted the greenback again in European session and price rose above Wednesday’s top at 98.43 to 98.66 in New York morning due to the better-than-expected U.S. jobless claims, the weak U.S. Philadelphia Fed business condition knocked price sharply lower later to as low as 97.00 in U.S. afternoon.
The British pound retreated initially from Wednesday’s top at 1.5549 to 1.5496 in Australia yesterday, however, cable rose in tandem with euro to 1.5544 in Asia and surged to 1.5595 in European morning after the release of upbeat U.K. retail sales (1.1% m/m and 3.0% y/y, better than the forecast of 0.6% and 2.5%). Later, price dropped sharply to 1.5523 in New York morning due to the better-than-expected U.S. jobless but only to rally to a fresh 7-week peak at 1.5652 in New York afternoon.
In other news, Fed’s Bullard said 'financial stability a very important issue for Fed, but does not see a big asset bubble threat at the moment; ‘yields still low in historic terms despite recent rise, although higher yields are a concern; momentum in U.S. housing market should be strong enough to overcome higher mortgage rates; tapering by a small amount at first wud be taken as signal by markets on pace of reduction in bond purchase.’
On the data front, U.S. CPI came in at 0.2% m/m n 2.0% y/y, same as the expectations. U.S. industrial production and capacity utilization were released at 0.0% and 77.6%, versus the expectations of 0.4% and 78.0% respectively. NAHB house market index came in at 59, versus the forecast of 57.
[B]Data to be released on Friday[/B] :
EU current account, trade balance, CPI, Italy current account, U.S. housing starts, building permits, University of Michigan consumer confidence.