[B]Market Review[/B] - 19/12/2013 [I]21:04GMT[/I]
[B]Dollar maintains a firm undertone after Wed’s tapering by Fed[/B]
U.S. dollar extended rally against other major currencies on Thursday following the Federal Reserve’s decision on Wednesday to start tapering its economic stimulus program.
The Federal Reserve announced on Wednesday that it would reduce its USD85 billion-a-month bond buying program by USD10 billion in January. In his last press conference as Fed Chairman Ben Bernanke said the economy was continuing to make progress.
During the day, although euro recovered after dropping further to 1.3650 in Thursday’s Asian trading, renewed dollar’s broad-based rebound capped intra-day gain at 1.3691 in European morning and price later tanked to 1.3658 in New York morning before stabilizing.
Versus the yen, dollar extended Wednesday’s rally to a fresh 5-year peak at 104.37 in Australia but only to retreat to 103.78 in Asia on profit-taking. Later, dollar’s broad-based rebound lifted price again in Europe and price edged higher to 104.35 in New York trading before easing.
Although cable found support at 1.6365 in Asia and then recovered to 1.6388 in European morning, dollar’s broad-based rebound together with cross-selling of sterling pressured price again in New York morning and price extended losses from Wednesday’s fresh 2-year peak at 1.6486 to 1.6335 before recovering.
On the data front, U.S. initial jobless claims rose for the second consecutive week last week and hit a 9-month high during the year-end holiday season, increased to 379K in the week ending December 14 from a revised 369K the prior week. A separate report later in the day showed U.S. existing homes in November declined for the third straight month, fell 4.3 percent to an annual rate of 4.90 million, the weakest pace since December 2012.
In other news, European Central Bank President Mario Draghi told Reuters as he arrived for the EU leaders summit that ‘the European Central Bank welcomed on Thursday a deal among EU finance ministers to set up an agency and network of funds to close troubled banks in the euro zone; it’s an important step towards completion of our banking union.’
[B]Data to be released on Friday: [/B]
Bank of Japan rate decision, U.K. consumer confidence, current account, GDP, PSNCR, public sector net borrowing, Germany PPI, consumer confidence, France business climate, EU consumer confidence, U.S. GDP, personal consumption, PCE, Canada CPI and retail sales.