[B]Market Review[/B] - 25/02/2014 [I]21:32GMT [/I]
[B]Dollar trades mixed against other major currencies after comments from Fed’s top regulator[/B]
Although data showed that U.S. consumer confidence deteriorated in February on Tuesday, dollar rose from session lows versus other major currencies as comments from Fed’s Daniel Tarullo prompted broad-based buying in greenback.
Fed’s Board Governor Daniel Tarullo said on Tuesday that ‘monetary policy a possible tool to deal with broad, sustained systemic risk; current financial risks do not warrant change to policy, cites high-yield corporate bonds, leveraged loans as risky areas; ad hoc supervisory actions have their limitations; supervisory tools, refinements to policy can reduce need to tighten in face of systemic risk; urges better framework to judge tradeoffs between financial stability, reduced economic activity; incorporating financial stability into monetary policy does not require new mandate; possible that interest rates will remain historically low for some time after Fed starts to raise them.’
During the day, the single currency moved narrowly above Asian low at 1.3729 in early trading on Tuesday and then rose to 1.3763 in European morning after data confirmed Germany’s economy expanded in Q4. Later, euro edged marginally higher to 1.3767 in New York morning after European Commission revised up its growth forecast for the euro zone this year but lack of follow through buying prompted long liquidation and price retreated sharply to 1.3715 due to comments from the Federal Reserve’s top regulator before stabilizing.
European Commission revised up its growth forecast for the euro zone to 1.2% this year, up from 1.1% in November, but cut its inflation forecast for 2014 to 1% from 1.5% in November and warned that debt levels in several countries will continue to climb.
Earlier, official data confirmed that Germany’s economy grew 0.4% in the fourth quarter and expanded 1.3% on a year-over-year basis as strong overseas demand bolstered exports.
Versus the Japanese yen, the greenback rose briefly to 102.63 shortly after Asian opening but cross-buying of yen on risk aversion due to a sharply decline in China’s yuan pressured price lower to 102.22 in European morning. Later, price fell further to 102.01 in New York morning after release of weaker-than-expected U.S. February consumer confidence before recovering.
The Conference Board reported that its consumer confidence index declined to 78.1 in February, down from 79.4 in January, amid concerns over the short-term outlook for business conditions, jobs, and earnings.
Cable found support at 1.6646 in Asian morning and price later rose above Monday’s high of 1.6679 to 1.6707 in European morning after reports showed stronger than forecast data on U.K. mortgage approvals and retail sales. Later, the British pound rose to 1.6724 in New York morning and then retreated sharply to 1.6642 on dollar’s broad based rebound before rising to another session high of 1.6728.
The British Bankers Association on Tuesday showed that mortgage approvals rose 57% in January from a year earlier to 49,972, hitting a 76-month high. A separate report by the Confederation of British Industry said U.K. retail sales rose at the fastest rate since June 2013 in February. The CBI distributive trades survey rose to 37, up from 14 in January and well ahead of forecasts for an uptick to 15.
[B]Data to be released on Wednesday: [/B]
Germany Gfk consumer confidence, UK exports, imports, GDP, U.S. mortgage applications and new home sales.