[B]Market Review [/B]- 20/08/2013 [I]21:16GMT[/I]
[B]Dollar falls to 6-month low against euro ahead of Fed minutes[/B]
The greenback tanked against euro on Tuesday ahead of the release of Fed minutes on Wednesday as market is expecting the July meeting minutes will offer clues to whether the central bank will pare its bond-buying measures in September.
Although the single currency retreated fm 1.3356 to 1.3324 in European morning, the strong rebound in eur/jpy coss pushed the pair above last Friday’s top at 1.3380 to 1.3407 in European morning, price eventually climbed to a 6-month top at 1.3452 in New York morning on dollar’s broad-based weakness before easing.
Versus the Japanese yen, despite dollar’s brief recovery to 97.87 in Asia, active cross buying of yen versus other currencies due to the steep fall in Nikkei-225 index pressured the pair below last Thursday’s low at 97.00 to 96.98 in European morning. Later, dollar’s broad-based weakness sent the pair marginally lower to 96.91 in New York morning before stabilising.
The British pound traded narrowly in Asia and dropped briefly to 1.5629 in European morning, renewed buying interest lifted the pair above Monday’s top at 1.5674 to 1.5680 and sterling later rose further to a fresh 8-week top at 1.5696 in tandem with euro in New York morning before trading sideways.
The Australian dollar fell sharply to a low at 0.9027 in Europe after early dovish RBA minutes in Asia but then staged a recovery to 0.9098 in New York on short-covering. The Reserve Bank of Australia released its minutes which stated that ‘members agreed should not close off possibility of further easing; neither did members want to signal an imminent intention to cut rates further; judged a rate cut was appropriate at Aug meeting; ; A$ still high by historical standards, possible could fall further to help rebalancing; inflation to remain within target range even with the impact of lower A$; expected the fall in A$ to gradually boost tradable prices over next few year; economic growth expected to remain modest for next few quarters before picking up.’
In other news, German Finance Minister Schaeuble said ‘current interest rates on German government bonds are still too low.’ German Finance Ministry said ‘expect German growth of 0.5-0.7% in 2013; unhealthy that Germany must pay interest rates at times below rate of inflation; there will be no new haircut for Greece but there will need to be a new aid programme; interest rates on 10-year German bonds of 2% are ok.’
BOJ Governor Kuroda said ‘BOJ’s stance is to do whatever it takes to beat deflation; Japan’s economy improvement is steady proceeding, seeing signs of positive cycle of output, income n spending.’
[B]Data to be released on Wednesday : [/B]
Australia leading indicator, U.K. PSNCR, public sector net borrowing, CBI distribute trades, U.S. existing home sales.