[B]Market Review[/B] - 26/02/2014 [I]20:32GMT [/I]
[B]Dollar rises broadly after the release of robust U.S. new home sales data[/B]
The greenback rose against major currencies on Wednesday due to the upbeat U.S. new home sales data, shrugging off the Tuesday’s poor consumer confidence data. Investors turned their attention to testimony by Federal Reserve Chair Janet Yellen on Thursday.
Official data showed that U.S. new home sales rose unexpectedly in January, surged by 9.6% to a seasonally adjusted 468,000 units last month, highest since July 2008. New home sales in December were revised up to 427,000 units from a previously reported 414,000 units.
Although the single currency rose to a session high of 1.3757 in European morning after data showed that Germany’s forward looking Gfk consumer sentiment index ticked up to a seven-year high of 8.5 for March from 8.3 in February, cross-selling in euro knocked price down ahead of New York open and price later tumbled to 1.3662 in New York morning before staging a recovery.
Dollar traded sideways against the Japanese yen after a brief rise to 102.41 in Asia but active cross-buying of yen versus other currencies capped intra-day gains there. The greenback dropped to 102.11 in New York morning and later rose to 102.61. Eur/jpy, aud/jpy and gbp/jpy crosses all fell sharply from 140.79 to 139.66, from 92.37 to 91.60 and from 170.95 to 169.97 respectively on Wednesday before stabilizing.
Although cable traded sideways in Asia and then staged a brief rebound from 1.6661 to 1.6702 in European morning after data confirmed that the rate of fourth quarter economic growth in the U.K. was unrevised at 0.7%, but the annual rate of growth was revised slightly lower.
Two members of the Bank of England’s monetary policy committee reiterated that the bank is planning to keep rates on hold for some time limited intra-day upside potential there and the British pound later dropped in New York morning on dollar’s broad-based strength to 1.6622.
David Miles said recent falls in inflation meant there was less pressure to raise borrowing costs, while the bank’s chief economist Spenser Dale said it was not planning to raise rates any time soon. While Broadbent said ‘BoE is not giving time specific guidance on when rates will rise; too much focus on specific date of when rates will rise first; timing of first interest rate rise has little bearing on average rate over next 5 years.’
In other news, Boston Federal Reserve Bank President Eric Rosengren said in remarks prepared for delivery to the Boston Economic Club that ‘the recent drop in the U.S. unemployment rate overstates the health of the labor market and should not trigger any speedy reduction in the Federal Reserve’s super-easy monetary policy; the high number of part-time workers who would rather work full-time, the still-high unemployment rate, and very low inflation suggest significant “slack” in labor markets and "call for a very patient approach to removing monetary policy accommodation, particularly given the softness in recent economic data.’
[B]Data to be released on Thursday: [/B]
New Zealand trade balance, exports, imports, Swiss GDP, France consumer confidence, Germany unemployment, CPI, HICP, EU economic confidence, consumer confidence, Canada current account, U.S. durable goods and jobless claims.