[B]Market Review[/B] - 07/01/2014 [I]21:37GMT [/I]
[B]Dollar strengthens after upbeat U.S. trade data[/B]
Dollar rose against its major peers on Tuesday after a report showed that the U.S. trade deficit shrank to the lowest level in four years in November, however, gain was limited as investors were eyeing Wednesday’s minutes of the Federal Reserve’s December meeting and Friday’s U.S. jobs report for December for further indications on the possible timing of reductions in Fed stimulus.
Versus the Japanese yen, dollar retreated after a brief rise to 104.62 in Asia in part due to cross-buying in yen, however, gains in the Nikkei futures gave support to the pair and dollar rose from European morning low at 104.25 to 104.74 in early New York trading after upbeat U.S. trade data.
U.S. Bureau of Economic Analysis said that the U.S. trade deficit narrowed to a four-year low of USD 34.25 billion in November from a deficit of USD 39.33 billion in October, whose figure was revised from a previously reported deficit of USD 40.6 billion.
Although euro rebounded after finding support at 1.3611 in early European trading and then rose to 1.3657 ahead of New York open, broad-based rebound in greenback after release of strong U.S. trade balance data pressured price lower to session low at 1.3596 in New York morning, however, euro pared intra-day loss in New York afternoon to 1.3640 before easing near the close.
Earlier, report showed that the annual rate of inflation in the euro zone slowed to 0.8% in December from 0.9% the previous month, fuelling fresh concerns over the threat of deflation in the currency bloc.
Similarly, although cable remained under pressure in Asia and then dropped to 1.6376 in European morning, price rose in tandem with euro ahead of New York open and penetrated Monday’s New York high of 1.6434 to 1.6439 but only to tank to 1.6374 later in the day due to dollar’s broad-based rebound.
In the other news, Fed’s Rosengen says ‘stimulus should be removed only gradually as economy continues to improve; Fed missing inflation, employment mandates by “fairly large margins”; inflation persistently below 2% a concern, leaves economy vulnerable; economic conditions improving; expects 3% growth in 2014.’
San Francisco Federal Reserve Bank President John Williams told reporters after a speech that “the Federal Reserve will make gradual cuts to its massive bond- buying program in coming months as long as the economy continues to improve, and only a significant deviation from those expectations would force it to change tack.”
[B]Data to be release on Wednesday: [/B]
U.K. BRC retails sales, Halifax house price Germany trade balance, export, import, current account, factory orders, Italy unemployment rate, EU retail sales, unemployment rate, n U.S. ADP unemployment change.