AceTraderforex Aug 22 : The single currency drops broadly after Fed minutes

[B]Market Review[/B] - 21/08/2013 [I]21:24GMT[/I]

[B]The single currency drops broadly after Fed minutes[/B]

The single currency fell on Wednesday as Fed minutes for July 30-31 meeting showed that the board support the timeline for tapering, however, the minutes reported only a few policymakers thought it would soon be time to ‘slow somewhat’ the pace of the central bank’s bond-buying, while others emphasized patience in deciding when to start to wind down the stimulus program.

Fed minutes showed ‘almost all FOMC members agreed change to Fed’s asset purchase program not yet appropriate at Jul meeting; a few members stressed patience in decision to reduce bond buys; a few others suggested might soon be time to "slow somewhat’ purchase pace; U.S. jobless rate had dropped “considerably” since QE3 began, but some other measures showed more modest labor market gains; inflation persistently below 2% target could pose risks to economy; several Fed participants willing to consider lowering 6.5% unemployment threshold for interest rates if easier policy needed; a few participants worried changes to forward guidance could undermine policy effectiveness; some participants concerned that higher market rates could be significant factor restraining economic growth.’

Earlier in the day, euro traded narrowly in Asian session and edged lower to 1.3381 in Europe and then 1.3354 in New York morning due to dollar’s broad-based strength. The single currency weakened further to 1.3335 after release of Fed minutes in New York afternoon but recovered to 1.3396 due to profit-taking.

Versus the Japanese yen, despite dollar’s brief drop to 97.13 in Asia due to the decline in Japan’s Nikkei-225 index, dollar’s broad-based strength lifted the pair to 97.68 at Asian midday and then 97.76 in New York morning after the release of strong U.S. existing home sales (6.5% versus the forecast of 1.6%). Later, usd/jpy rose further to 97.98 in New York afternoon after the Fed minutes.

The British pound traded narrowly in Asian morning and then rose above Tuesday’s top at 1.5696 to 1.5702 in European session due to cross buying of sterling versus euro. Later, cable posted a brief spike to a fresh 8-week top 1.5716 in New York afternoon but only to drop to 1.5665 before renewed buying pushed sterling marginally higher to 1.5618.

On the data front, U.K. PSNB in Jul came in at at -1.635 billion sterling, higher than the expectation of -4.65 billion. U.K. CBI manufacturing order book balance came in at 0, the highest since Aug 2011, versus the previous -12. U.S. existing home sales came in at 6.5%, much better than the forecast of 1.6% n the revised -1.6% in June.

In other news, ECB’s Asmussen said ‘come to Athens to take stock of current programme, see what situation is; key now is to create growth n jobs in Greece; nothing to add to Euro group decisions fm last Nov, pledging support to Greece until it regains market access; will look at how things unfold in Greece but not b4 spring next year.’

[B]Data to be released on Thursday : [/B]

Japan machine tools orders, China HSBC manufacturing PMI, Swiss trade balance, France manufacturing PMI, service PMI, German manufacturing PMI, service PMI, EU manufacturing PMI, service PMI, Canada CPI, U.S. jobless claims, Markit PMI, house price index, leading indicators.