[B]Market Review[/B] - 07/02/2014 [I]18:31GMT
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[B]U.S. dollar rallies versus Japanese yen on the rise in global stock markets[/B]
U.S. dollar rallied to as high as 102.58 against the Japanese yen on improved risk appetite due to the rally in global stock markets.
Although the greenback retreated briefly and strongly from 102.53/58 to an intra-day low of 101.41 after the release of weaker-than-expected U.S. non-farm payrolls data which came in at 113,000 versus economists’ forecast of 185,000 jobs added to the market, the pair rallied to 103.58 again due to the rally in U.S. stock markets.
Despite euro’s brief retreat to 1.3553 in European session after German Constitutional Court said to refer ECB’s bond-buying programme to European Court, the single currency rallied later to an intra-day high of 1.3648 after the release of weaker-than-expected U.S. non-farm payrolls data, however, profit-taking knocked price lower to 1.3576 before rebounding.
German Constitutional Court said ‘to refer ECB’s bond-buying programme to European Court; it will rule on legality of ESM bailout mechanism and fiscal pact on March 18; sees substantial reasons to suggest OMT programme exceeds ECB mandate and infringes ban on funding member states; it is possible however that limited interpretation of OMT could make it conform to law.’ The complaint said the ECB’s plan, which pumps money into the financial system much the same way as the U.S. quantitative easing program, oversteps its mandate and violates a ban on it funding governments.
The British pound fell briefly to 1.6301 after the release of weaker-than-expected U.K. industrial and manufacturing output which came in at 0.4% m/m (forecast 0.6%), 1.8% y/y n 0.3% m/m (forecast 0.6%) or 1.5% y/y, however, cable ratcheted higher in tandem with euro in New York.
In other news, Canada’s Flaherty said asked if 2015-16 surplus could be bigger than C$3.7 bln predicted in November; when asked what he would do about price parity with the United States, says wait for budget; next week’s budget will not show a balance for coming year; primary function of Tuesday’s budget is to stay the course, not waver from path of fiscal responsibility; Jan job gains are very good but important to look at trend, which also is good. The Canadian dollar tumbled fm 1.1080 to 1.0968 after U.S. NFP data before rebounding on short-covering.