[B]Market Review - 06/07/2013 [I]01:06GMT[/I][/B]
[B]Dollar rallies broadly after U.S. payrolls beat estimate[/B]
The greenback rose strongly against other currencies on Friday as the better-than-expected U.S. non-farm payrolls fueled market expectations that the Federal Reserve will start to taper its stimulus measures as early as September.
Versus the Japanese yen, although the greenback rose initially to 100.47 in Asia due to the strong rise in Japan’s Nikkei-225 index, active cross buying of yen versus euro pressured the pair to 99.89 in European morning, however, the pair jumped after release of robuts U.S. jobs data and quickly climbed above Wednesday’s top at 100.85 to a fresh 1-month peak of 101.14 in New York morning before retreating to 100.71. Later, renewed buying interest lifted dollar to 101.23 in U.S. afternoon.
U.S. non-farm payrolls in June came in at 195K, much better than market consensus of 165K, previous reading was revised upward to 195K. Unemployment rate in June remained at 7.6% but was a shade above expectation of 7.5%
The single currency traded inside narrow range in Asia and penetrated Thursday’s low at 1.2883 to 1.2869 in European morning on active cross selling of euro versus yen. Later, price tanked to a 6-week bottom at 1.2806 in New York morning on dollar’s strength after the upbeat U.S. jobs data and then moved narrowly in New York afternoon session.
Althouugh the British pound also moved narrowly above Australian morning low at 1.5026 in Asia and then weakened to 1.4963 in European morning on cross selling of sterling versus euro. Dollar’s broad-based strength pressured the pair further lower to a near 4-month low at 1.4858 in New York morning before trading sideways for rest of New York session.
In other news, S&P cut Portugal’s credit rating to negative from stable on political uncertainty. EU’s Rehn said ‘Portugal working on stabilizing political situation; Portugal needs stability to exit aid program in time; confidence in European economy is being restored; sees positive growth of European economy in autumn; European economy should strengthen next year; we should have a crisis-free summer: reforms required in Portugal are difficult; confident Portugal will form “renewed coalition”.’ ECB’s Liikanen said ‘ECB emphasized that it conducts that it policy for euro area; accommodative policy continues; expect to keep rates at current or lower level; forward guidance will depend on economic outlook; markets seem to have understood ECB’s message.’
On the data front, German factory orders in May was released at -1.3% m/m and -2.0% y/y, worse than the expectation of 1.2% and 0.1% respectively.
[B]Data to be released next week : [/B]
Japan current account, economic watch DI, Swiss unemployment rate, industrial production, Germany trade balance, current account, import, export, industrial production, EU sentix investor confidence, Canada building permits on Monday.
Australia NAB business condition NAB business confidence, Japan machine tools orders, China CPI, PPI, Swiss retail sales, U.K. RICS house price, industrial production, manufacturing production, trade balance, Canada housing starts, U.S. retail sales on Tuesday.
Australia Westpac consumer confidence, Japan domestic CGPI, tertiary industrial index, consumer confidence, Germany CPI, HICP, France current account, industrial production, manufacturing production, Italy industrial production, U.S. wholesale inventories, wholesale sales and FOMC minutes on Wednesday.
New Zealand business NZ PMI, Australia employment change, unemployment rate, Japan machinery orders, BoJ interest rate decision, France HICP, CPI, Canada new house price index, U.S. import price index, jobless claim, Fed budget on Thursday.
Australia home loans, Japan industrial production, capacity utilization, Italy CPI, HICP, EU industrial production, U.S. PPI, core PPI, University of Michigan consumer confidence on Friday.