[B]Market Review [/B]- 23/08/2013 [I]21:33GMT[/I]
[B]Dollar weakens broadly due to weak U.S. new home sales[/B]
The greenback fell against euro and yen on Friday as the worse-than-expected U.S. new home sales signalled that U.S. economy still needs stimulus measures to support its growth.
The single currency edged lower to 1.3335 in European morning but then staged a recovery to 1.3371 due partly to the comments from ECB’s policymaker Nowotny who said ‘does not see many arguments now for a rate cut.’ Later, despite brief fall to 1.3333 in New York morning, euro rose strongly to 1.3410 on dollar’s broad-based weakness after the release of worse-than-expected U.S. new home sales (-13.4% versus the expectation of -2.0%) and then stabilised for the rest of the day.
Versus the Japanese yen, the greenback extended recent upmove to 99.14 in European morning before pullback to 98.74. Later, despite dollar’s marginal gain to a fresh 2-week top at 99.15 in New York morning, the pair fell sharply to 98.38 after the release of U.S. new home sales.
Although the British pound traded narrowly in Asia and then jumped to 1.5638 in European morning after the release of better-than-expected U.K. GDP (0.7% m/m and 1.5% y/y, versus the forecasts of 0.6% and 1.4%), active cross selling of sterling versus euro pressured the pair below Thursday’s low at 1.5563 to 1.5538 in New York morning but only to climbed back to 1.5597 in tandem with euro on dollar’s broad-based weakness.
In other news, Fed’s Lockhart said ‘expect 2-2.5% GDP growth in rest of year; needs data showing sustainable economic growth in order to reduce QE3 in Sep; too early to tell whether recent private-market rate rises will create economic contraction.’ Fed’s Bullard said ‘don’t need to be any hurry to taper QE3 in Sep; we can afford to be deliberate in decision on QE3 due to data; QE3 has been very successful in easing market conditions, less clear the effect on economy.’ Fed’s Williams said ‘decision to taper QE3 will depend on growth in job creation, stronger inflation; we should reduce asset purchase later this year; tapering QE3 wud come in gradual series of steps; expect significant step up in U.S. economy growth later this year and in 2014; low level of inflation is a concern but as long as it progresses as we’ve seen “feels good about that”.’
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Data to be released next week : [/B]
[B]Monday:[/B] New Zealand trade balance, import, export, U.S. durable goods. U.K. financial market is closed on Monday due to public holiday.
[B]Tuesday:[/B] Germany Ifo business climate, current assessment, U.S. retail sales, S&P home price index, consumer confidence.
[B]Wednesday:[/B] Swiss consumption indicator, Germany Gfk consumer confidence, U.K. CBI distributes trades, U.S. pending home sales.
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Thursday:[/B] New Zealand ANZ business confidence, Australia HIA new home sales, Japan retail sales, France business climate, Italy consumer confidence, Germany unemployment change, unemployment rate, CPI, HICP, U.K. business barometer, U.S. GDP, jobless claims, personal consumption, PCE core, Canada PPI.
[B]Friday [/B]: Japan manufacturing PMI, household spending, unemployment rate, CPI, industrial production, housing starts, Swiss KOF indicator, EU economic sentiment, business climate, consumer confidence, unemployment rate, CPI, Italy unemployment rate , CPI, HICP, PPI, Canada GDP, U.S. personal income, personal spending, PCE index, Chicago PMI and University of Michigan consumer confidence.