[B]Market Review [/B]- 15/01/2014 [I]22:09GMT [/I]
[B]Dollar strengthens broadly after upbeat U.S. data[/B]
The greenback rose further against the other major currencies on Wednesday after data showed that U.S. producer price inflation rose in December, while a separate report showed that manufacturing activity in the Empire state rose far more strongly than forecast in the current month.
Versus the Japanese yen, dollar rose above Tuesday’s high of 104.29 to 104.47 in Asia and then traded sideways in Europe, however, price found support at 104.22 in New York morning and later rose to further to 104.70 near New York close on dollar’s broad-based firmness after release of upbeat U.S. data.
U.S. producer price inflation rose 0.4% last month, the biggest increase since June, recovering from a 0.1% decline in November and was 1.2% higher from a year earlier. U.S. Core PPI was up 0.3% in December and rose 1.4% on a year-over-year basis, compared to expectations for a monthly increase of 0.1% and an annual gain of 1.3%. A separate report showed that manufacturing activity in the Empire State expanded at the fastest pace since May 2012 this month, Fed’s general business conditions index jumped to 12.51 in January from an upwardly revised 2.22 in December.
The single currency fell below Tuesday’s low at 1.3649 to 1.3627 in Asia. Despite a recovery to 1.3645, release of lower-than-expected Germany 2013 GDP pressured price again in European morning and price tanked to 1.3608 and then further to 1.3582 in New York morning after release of robust U.S. data before stabilising.
Germany’s Federal Statistics Office said Wednesday the economy expanded by just 0.4% in 2013 after increasing by 0.7% in 2012, as the crisis in the euro zone acted as a drag on growth. Market had been expecting growth of 0.5%.
Cable traded in a choppy fashion on Wednesday but ended lower on dollar’s broad-based firmness. Despite retreating from Asian high of 1.6443 in tandem with euro to 1.6377 in European morning, active cross-buying of sterling due to comments from British Financial Minister Osborne lifted price to 1.6437, however, renewed selling interest capped gain there and price later dropped further to a fresh 3-week low of 1.6323 in New York morning after upbeat U.S. data.
Britian’s Financial Minister Osborne said Wednesday that ‘stalling EU-US free trade deal would be a betrayal; open to idea of smaller number of EU states liberalizing trade in certain areas without overall EU agreement; worried that Eurozone countries could use their voting weight to rewrite EU rules, impose laws on UK’s financial services industry; there’s a “very real risk” that badly thought through EU laws will be imposed on the UK, says damaging city of London would be bad for all of Europe; non-euro states need their rights legally protected if countries like Britain are to remain in the EU; treaties are not fit for purpose; doesn’t want Britain to be forced to choose between joining the euro and leaving the EU.’
[B]Data to be release on Thursday: [/B]
Japan Tertiary industry index, machinery orders, domestic CGPI, Australia employment change, unemployment rate, U.K. RICS house prices, Germany CPI, HICP, Italy trade balance, EU CPI, U.S. CPI, Jobless claims, Net LT TIC flows, Philadelphia Fed survey and NAHB housing mrkt index.