[B]Market Review[/B] - 13/02/2014 [I]20:11GMT [/I]
[B]
U.S. dollar drops versus euro and Japanese yen on weak U.S. retail sales data[/B]
U.S. dollar fell against the single currency and Japanese yen after the release of weaker-than-expected U.S. retail sales data and more-than-expected U.S. initial jobless claims.
The single currency ratcheted higher on Thursday after Wed’s brief but strong pullback to 1.3563. Euro rallied to as high as 1.3692 whilst U.S. dollar tumbled to 101.70 versus the Japanese yen after the release of weaker-than-expected U.S. retail sales and more-than-expected U.S. initial jobless claims.
The British pound continued its recent winning streak on Thursday, following Wed’s release of the BoE quarterly Inflation Report upgraded Britain’s economic forecast as well as lifting market’s expectation of a rate hike in the 2nd quarter of 2015 together with the hawkish comments from BoE Governor Mark Carney. Price strengthened to a fresh 2-1/2 year high at 1.6675 on dollar’s broad-based weakness after the release of weaker-than-expected U.S. retail sales data before retreating. Sterling gained broadly esp vs the euro to 0.8180 in Asia, just abv eur/gbp’s 1-year trough at 0.8168 in Jan.
Australian dollar nose-dived in Asian morning after the release of Australia’s jobs growth in Jan came in at -3.7k versus market forecast of 15k whilst unemployment rose to 6.0% (highest since Jul 2003) versus forecast of 5.9%, price tanked from 0.9031 to as low as 0.8938 after the surprisingly weak jobs report and later 0.8928 before rebounding on short-covering in New York.
In other news, the Federal Reserve Bank of New York said ‘market participants in a key short-term funding market are not addressing the risk of destabilizing “fire sales” of collateral in the event of a default by one of the market’s big players, and regulators may be forced to step in to reduce that risk; the so-called tri-party repurchase, or repo, market is at particular risk of seizing up entirely, as it did in the 2008 financial crisis, because investors in the sector are “highly vulnerable” to liquidity pressures and credit losses that could force them to sell the collateral of a defaulted counterparty.’
[B]Friday[/B] will see the release of China’s PPI and CPI, Germany’s and Eurozone GDP, U.K. GDP, U.S. import and export price, industrial production, capacity utilization, University of Michigan consumer confidence.