[B]Market Review[/B] - 06/08/2013 [I]22:33GMT[/I]
[B]Dollar falls to 6-week low vs yen ahead of BoJ monetary meeting[/B]
The greenback weakened broadly on Tuesday and continued its recent fall against the yen on speculation that the Bank of Japan will refrain from adding more stimulus at its 2-day policy meeting which begins on Wednesday.
Although the greenback staged a rebound from Asian morning low at 97.84 to session high at 98.59 at European open on cross selling of yen versus other currencies, renewed selling checked intra-day gains and pushed price back down to 98.02 in European morning. Dollar remained under pressure, weighed down by waning expectation that the Federal Reserve would start reducing its bond purchases in September and dropped to a fresh 6-week low at 97.50 in New York morning before stabilising.
The single currency traded in choppy fashion in Asia before rising to 1.3295 in European morning after data showed Germany’s factory orders rebounded in June more than economists’ forecast, adding to signs the region is recovering. Euro continued to ratchet higher and rose to an intra-day high at 1.3323 in New York morning, however, price briefly retreated to 1.3281 at U.S. midday before rebounding again.
German factory order in Jun came in at 3.8% m/m n 4.3% y/y, better than the expectation of 1.0% n 0.3%, previous reading is revised to -0.5% n -1.8% respectively.
The British pound traded sideways in Asian before rising to an intra-day high at 1.5392 in European morning after the release of much stronger-than-expected U.K. industrial production and manufacturing production. Despite a brief pullback to 1.5335 at New York open, renewed buying lifted the pair to 1.5387 in New York morning before falling again.
U.K. industrial output in Jun came in at 1.1% m/m and 1.2% y/y, better than the expectation of 0.6% and 0.7% respectively. Manufacturing output in Jun was released at 1.9% m/m and 2.0% y/y, stronger than the forecast of 0.9% and 0.9% respectively.
In other news, Chicago Fed President Charles Evans said ‘Fed is quite likely to reduce monthly bond buys starting later this year; he wud not rule out cutes to bond buys begin next mth’ total size of QE3 will likely end up being at least $1.2 trln, twice the size of QE2; sees U.S. GDP growth at 2.5% in second half og 2013; over 3% next year; sees U.S. economy adding 175K to 200K jobs a mth; sees unemployment falling to 7.2%-7.3% by year end, sees 7% by mid-2014.’
On the data front, U.S. Redbook retail sales came in at 1.0% m/m and 3.7% y/y. U.S. trade balance in Jun came in at -34.22B, versus the expectation of -43.5B, previous reading was revised to -44.10B.
[B]Data to be released on Wednesday : [/B]
New Zealand unemployment rate, employment change, Australia home loans, Germany industrial production, France trade balance, U.K. employment confidence, Canada building permits, PMI.