[B]Market Review[/B] - 08/01/2014 [I]21:32GMT [/I]
[B]U.S. dollar rises versus euro after Fed minutes[/B]
The greenback rose against the single currency on Wednesday after the release of minutes of the Federal Reserve’s December meeting, which showed the U.S. central bank was on track to wind down its bond purchases at a steady pace.
The Fed minutes laid out the central bank’s rationale for cutting purchases of Treasuries and mortgage-backed securities to $75 billion a month from $85 billion starting this month. The minutes showed showed many members of the policy-setting Federal Open Market Committee wanted to proceed with caution in trimming the asset purchases, and most wanted to stress that further reductions were not on a preset course.
Some of the 10 voting policymakers “expressed concern about the potential for an unintended tightening of financial conditions if a reduction in the pace of asset purchases was misinterpreted as signaling that the committee was likely to withdraw policy accommodation more quickly than had been anticipated.”
During the day, the single currency retreated against the dollar after meeting renewed selling at 1.3635 in Asia in part due to cross-selling vs yen and sterling and dropped to 1.3581 in European morning despite the release of upbeat euro zone retail sales in November. Later, the pair fell further to 1.3568 in New York morning after release of better-than-expected U.S. ADP employment change in December but lack of follow through selling prompted short-covering and price rebounded to 1.3618 before falling to a fresh 1-month low at 1.3554 near New York close.
ADP non-farm payrolls rose by 238,000 in December, exceeded expectations for an increase of 200,000. November’s figure was revised up to a gain of 229,000 from a previously reported increase of 215,000.
Versus the Japanese yen, although dollar rose in Asia due to the rally in Nikkei 225 index and extended gain from Australian low at 104.60 to 105.13 in European morning, falling Nikkei futures in Europe pressured price to 104.67. Dollar later staged a brief rebound to 105.01 in early New York morning after upbeat U.S. ADP employment change and rose marginally higher to 105.05 after the release of FOMC minutes before retreating.
Cable edged higher after meeting cross-related buying interest at 1.6377 in Asia and price later rose to 1.6434 ahead of New York open, despite a brief selloff to 1.6400 after U.S. ADP employment change, active selling in eur/gbp cross continued to support the cable and price later rose to 1.6472 in New York morning before easing.
On the data front, eurozone unemployment rate in the region came in unchanged at 12.1% in November. A separate report showed euro zone retail sales rose 1.4% in November, the biggest rise since November 2001, recovering from a 0.4% fall in October.
[B]Thursday[/B] will see the release of Australia retail sales, building approvals, France trade balance, U.K. trade balance, industrial production, BOE rate decision, EU business climate, economic sentiment, consumer confidence, ECB rate decision, Canada housing starts, building permit, new housing price index and U.S. jobless claims data.