[B]Market Review[/B] - 13/01/2014 [I]21:48GMT[/I]
[B]Yen gains broadly on risk aversion[/B]
The dollar dropped below the 103 level to a three-week low of 102.85 against the yen on Monday, driven lower by expectations that Friday’s surprisingly weak U.S. jobs report for December will prompt the Federal Reserve to maintain loose monetary policy for longer and U.S. treasury yields will cotninue to fall.
Versus the Japanese yen, dollar fell after meeting renewed selling at 104.14 in Australia and tanked below last Friday’s low of 103.83 to 103.26 in Asia. Later, despite a recovery to 103.57 in European trading, active cross-buying of yen pressured the dollar again in New York morning and price dropped further to a fresh 3-week low of 102.97 before stabilizing.
The single currency ratcheted lower after failure to penetrate last Friday’s high of 1.3688 in Asia and price retreated from 1.3685 to 1.3638 ahead of New York open before recovering. Price later climbed back to 1.3661 in New York morning in part due to active buying in eur/gbp cross and then traded sideways for rest of the session. Euro’s losses versus dollar were limited amid that Fed will adopt a more cautious approach to scaling back its stimulus program, after cutting it by USD 10 billion in December.
The British pound tumbled versus the dollar on Monday, despite a recovery to 1.6508 in Asia, active cross-selling of sterling versus yen and euro pressured price sharply lower to 1.6422 in European morning. Cable later climbed back to 1.6466 but another round of selling sent price further lower to 1.6347 in New York morning before stabilizing.
On the data front, Italian industrial output rose for a third consecutive moth in November, up 0.3% from a month earlier.
In other news, Atlanta Fed President Dennis Lockhart told reporters that “The Federal Reserve should clarify its future plans for raising interest rates now that U.S. unemployment has dropped to 6.7 percent, close to the central bank’s stated threshold of 6.5 percent for considering tighter policy.”
[B]Data to be released on Tuesday: [/B]
Japan current account balance, Economic watch DI, France current account, CPI, HICP, Italy CPI, HICP, U.K. PPI, CPI, RPI, ONS house price, EU industrial production, U.S. retail sales, import price index, export price index, Redbook retail sales and business inventories.