[B]Market Review[/B] - 28/12/2013 [I]02:38GMT [/I]
[B]Euro hits 2-year high and then retreats sharply in New York session[/B]
Euro rallied to a fresh 2 year high at 1.3994 (EBS) against the dollar in Europe after comment from European Central Bank Governing Council member Jens Weidman, who said ‘low inflation pressure does not give a license for arbitrary monetary easing; must be sure to raise rates in time should inflation pressure mount.’
Earlier in the day, the single currency found renewed buying interest at 1.3687 in Australia and ratcheted higher in Asia. The pair then rallied above October’s peak at 1.3833 to 1.3894 in thin holiday trading conditions at European midday after hawkish comments from ECB’s Jens Weidman, however, profit-taking pressured price in New York morning and price later fell sharply to 1.3732 ahead of New York close.
Versus Japanese yen, although the greenback rose to 105.05 ahead of Tokyo open, renewed selling interest pressured price from there and price retreated to 104.65 in European morning. Dollar later rebounded to 105.01 in New York morning and then rose further to a fresh 5-year peak at 105.19 in New York afternoon.
Cable tracked euro’s intra-day move closely on Friday. The pair found support at 1.6406 in Australian session and then rallied to a fresh 2-year peak at 1.6578 in European morning before retreating. The pound later fell sharply to 1.6458 ahead of New York close.
In other news, Bloomberg news reported Japan Vice Economic Minister Yasutoshi Nishimura said ‘'wants to quickly cut corporate tax rate below 30%; want bolder corporate tax cuts in special zones; want to show tax cut direction in revised growth plan; may be hard to declare in 2014 Japan deflation end; revised growth strategy planned for June 2014; ‘hopes BOJ will deal appropriately with impact of sales tax hike; BOJ’s Kuroda, PM Abe to hold regular dialogue to deal with sales tax hike impact; weak yen is positive for Japan’s macro economy; wage hikes are biggest issue for Japan’s economy in 2014; not so easy to declare that deflation has been beaten.’
On the data front, France PPI in November came in at 0.5% m/m and -0.6% y/y, higher than the forecasts of -0.1% and -1.2%, previous reading was revised to -0.3% and 1.3%.respectively.
[B]Data to be released next week:[/B]
U.K. hometrack housing survey, Italy PPI, U.S. pending home sales on [B]Monday.[/B]
U.K. Lloyds business barometer, U.S. Redbook retail sales, S&P home price, Chicago PMI, consumer confidence on [B]Tuesday. [/B]
China manufacturing PMI on [B]Wednesday.[/B] New Zealand, Australia, Japan, Hong Kong, Switzerland, Germany, France, U.K., U.S., Canada financial markets closed due to public holiday.
China HSBC manufacturing PMI, Italy manufacturing PMI, France manufacturing PMI, Germany manufacturing PMI, EU manufacturing PMI, EU manufacturing PMI, U.K. manufacturing PMI, U.S. jobless claims, manufacturing PMI, ISM manufacturing PMI, construction spending on [B]Thursday.[/B] Financial markets in New Zealand, Japan, China and Switzerland will be closed due to public holiday.