[B]Market Review[/B] - 22/08/2013 [I]21:22GMT [/I]
[B]Dollar rises to two-week high against the yen on QE tapering expectations[/B]
The greenback strengthened to a two-week high against the Japanese yen on Thursday as the Federal Reserve’s minutes, which was released on Wednesday, supported the view that the central bank will pare its stimulus measures in September.
Versus the Japanese yen, dollar traded with a firm undertone throughout the day. The pair jumped to 98.33 in Asia due to rebound in Japanese equities and then rose above last Thursday’s top at 98.66 to a two-week high at 98.83 in Europe on active cross selling of yen versus other currencies. However, price retreated to 98.41 after the release of the higher-than-expected U.S. weekly jobless claims (336K versus the forecast of 330K) before stabilising.
Although the single currency traded narrowly in Asia and then dropped to 1.3322 in European morning due to the weak French manufacturing and services PMI (49.7 and 47.7, versus the forecasts of 50.3 and 49.2), price rebounded to 1.3364 after the release of strong German and euro zone PMIs but only to fall to 1.3299 due to cross selling in euro versus sterling. However, the worse-than-expected U.S. jobless claims lifted euro to 1.3373 in New York morning and price then stabilised for the rest of the day.
German manufacturing and services PMI in August were released at 52.0 and 52.4, stronger than the forecasts of 51.2 and 51.8. Euro zone manufacturing PMI in August came in at 51.0, better then the forecast of 50.2 whilst service PMI in Aug came in at 51.7, stronger than the expectation of 50.2.
The British pound extended steep fall from Wednesday’s two-month peak at 1.5718 to 1.5588 in Asian morning. Despite cable’s brief recovery to 1.5623 in European morning, cross selling of sterling versus euro pressured price to 1.5563 before staging a recovery to 1.5614 in New York morning on weak U.S. jobs data. Gbp/usd then moved in a choppy fashion above said session low for rest of the New York session.
On the data front, U.S. Markit PMI preliminary came in at 53.9, versus the forecast of 54.2. U.S. leading index in July was released at 0.6%, better than the forecast of 0.5%. U.S. housing price index m/m was released at 0.7%, versus the revised 0.8% in May.
[B]Data to be released on Friday :[/B]
Germany GDP, export, import, U.K. GDP, BBA mortgage approvals, EU consumer confidence, Canada CPI, U.S. new home sales.