[B]Market Review[/B] - 20/12/2013 [I]20:24GMT [/I]
[B]Dollar turns lower against major currencies on long liquidation[/B]
The dollar turned lower against other major currencies on Friday on long liquidation, erased early gains on upbeat U.S. economic growth data and the Federal Reserve’s decision to begin tapering its stimulus program.
During the day, although euro remained under pressure in Asia and fell to 1.3625 after Standard & Poor’s cut its supranational long-term rating on the European Union to AA+ from AAA, cross-related buying of euro lifted price to 1.3663 in early European trading before dropping back to 1.3632 in New York morning on upbeat U.S. gross domestic product data. Later, dollar’s renewed broad-based weakness lifted price again and price subsequent rallied to 1.3710 after report showed improving euro zone consumer confidence in December before retreating, last seen around 1.3667 near New York closing.
On the data front, report showed U.S. gross domestic product advanced 4.1 percent in third quarter, the fastest in two years and the second biggest since the country’s steep recession officially ended in mid-2009.
Versus the Japanese yen, dollar edged higher in Asia and briefly rose to 104.59 before easing, price later strengthened to a fresh 5-year peak at 104.64 in New York morning after release of better-than-expected U.S. GDP and personal consumption, however, lack of follow through buying prompted long liquidation and price subsequent tumbled to 103.85 before stabilising.
Cable tracked euro’s movement closely on Friday, although price penetrated Thursday’s low at 1.6335 in European morning to 1.6319 and then rebounded to 1.6369, price fell again and hit a fresh session low at 1.6315 in New York morning but only to rallied to 1.6395 before easing.
Earlier, official data showed that the U.K. current account deficit widened to 20.7 billion pounds in the third quarter, from 6.2 billion pounds in the three months to June, while a separate report showed that the U.K. gross domestic product expanded by 0.8% in the third quarter, in line with market expectation.
In other news, BOJ’s Governor Kuroda said on Friday that ‘Fed’s start of tapering reflects steady recovery in U.S. economy; correction in excessive yen strength has been positive for Japan’s economy; no chance to view japan to steadily head towards 2% inflation despite economic fluctuation from sales tax hike; correction in yen strength has boosted corporate profits and improved sentiment; BOJ’s existing two loan schemes have played key roles, will mull if to extend deadlines; BOJ monetary policy not aimed at forex markets; Japan consumer inflation to slightly exceed 1% by year end; don’t expect April sales tax hike to cause big problem.’
[B]Data to be released next week: [/B]
Swiss UBS consumption indicator, Italy consumer confidence, Canada GDP, U.S. Chicago Fed index, personal income, personal consumption, PCE, University of Michigan consumer confidence [B]on Monday.[/B] Japan financial markets are closed due to public holiday.
France GDP, U.K. BBA mortgage approvals, U.S. durable goods, Redbook retail sales, house price index, New home sales [B]on Tuesday [/B]
No economic data is released on Wednesday. Australia, New Zealand, France, U.K., Swiss, Germany, U.S. and Canada financial market are [B]closed due to Christmas day. [/B]
Japan manufacturing PMI, BOJ MPC minutes, housing starts, construction orders, U.S. jobless claims. on Thursday. Australia, New Zealand, Germany, France, U.K. Canada financial markets are closed due to [B]boxing day. [/B]
Japan household spending, unemployment rate, CPI, industrial production, retail sales, France PPI [B]on Friday. [/B]