[B]Market Review - 03/07/2013 [I]22:24GMT[/I][/B]
[B]Euro rallies in NY on steep fall in Portuguese bond yields[/B]
The single currency erased early fall and rallied against the greenback in New York morning as Portuguese bond yields came off from their earlier highs.
Euro traded narrowly in Asia and fell sharply to a fresh 1-month low at 1.2923 in European morning on the steep fall in European equities together with the active cross selling of euro versus yen. However, the pair staged a rebound to 1.2984 despite better-than-expected ADP employment change (188K, higher than the forecast of 160K). Later, the pair rallied to a session peak of 1.3032 in New York morning on the steep fall in Portuguese bond yields.
Portugal’s 10-year yields rose above 8% for the 1st time since November to as high as 8.11% before retreating to around 7.47%.
Versus the Japanese yen, although the greenback extended recent upmove to a fresh 1-month top at 100.86 in Australia, price traded narrowly in Asia and then tanked in European morning due to the selloff in Nikkei 225 futures, the pair hit a low at 99.25 before staging a recovery to 99.77 after the release of U.S. ADP employment change and jobless claims (343K, better than the expectation of 345K). Later, despite brief retreat to 99.39 on weak U.S. non-manufacturing PMI (52.2 versus the forecast of 54.0), cross selling of yen versus euro lifted dollar to 100.14 at New York midday before stabilising.
The British pound traded narrowly and dropped below Tuesday’s low at 1.5137 to 1.5130 in European morning, the pair rallied after the release of U.K. PMI service (56.9 versus the forecast of 54.5). Cable rose in tandem with euro to 1.5305 in New York morning.
In other news, Portugal PM Coelho said ‘confident will overcome political difficulty; believes internal crisis can be overcome quickly; so far have strong results from bailout adjustment.’ German government spokesman said ‘Portugal has taken impressive steps in overcoming the crisis, program will bring result; expects Portugal to stick to reform course.’ EU said ‘hope Greece, Troika to reach accorded by Friday; Greek fiscal gap "not enormous; Bank of Cyprus not yet ready to exit resolution; sees “transitory” impact of Portugal tumult on EU bonds; Portugal elections would complicate next review; Portugal continues to be “well financed” has no Portugal financing concerns for all of 2013; Greece doesn’t need full payment in July, August.’
On the data front, Germany and EU PMI services in June came in at 50.4 and 48.3, versus the forecast of 51.3 and 48.6. China non-manufacturing PMI in June was released at 53.9, previous reading was 54.3. China HSBC Services PMI in June came in at 51.3 versus the previous reading of 51.2.
[B]Data to be released on Thursday: [/B]
Australia building approvals, Lloyds employment confidence, BoE rate decision, BoE asset purchase target, ECB rate decision. U.S. markets will be closed due to Independence Day holiday.