[B]Market Review - 09/07/2013 [I]22:20GMT[/I][/B]
[B]Euro tumbles on dovish comments from ECB’s Asmussen[/B]
The single currency tanked versus other currencies on Tuesday as the European Central Bank policymaker Asmussen said the ECB forward guidance extends beyond 12 months and has a range of standard and non-standard measures to be deployed. Euro dropped further in New York afternoon after S&P lowered Italy sovereign credit rating from BBB+ to BBB.
Although the single currency rose from Asian low at 1.2846 to 1.2898 on active cross buying of euro versus yen, the pair edged lower in European session and tanked below last Friday’s low at 1.2806 to 1.2763 in New York morning due to the comments from ECB’s Asmussen. Price dropped further to a fresh 3-month low at 1.2755 in U.S. afternoon before stabilising.
The European Central Bank policymaker Joerg Asmussen said ‘expect ECB to take over SSM next September or October; expect resolution mechanism to be operational around the same time; ECB forward guidance goes beyond 12 months; our aim is to clearly anchor expectations of markets for foreseeable future; if needed we have a range of standard n non-standard measures we can deploy; would not rule out new LTRO.’
Versus the Japanese yen, the greenback rose from Australian low at 101.77 to 101.30 in European morning on cross selling of yen versus euro and then edged lower to 100.83 in U.S. afternoon due to the selloff in eur/jpy.
Although the British pound rose from Asian low at 1.4920 to 1.4982 in European morning, the pair tumbled to 1.4832 after the release of worse-than-expected U.K. industrial output and manufacturing production. U.K. industrial output in May came in at 0.0% m/m and -2.3% y/y, worse than the forecasts of 0.2% and -1.5%. U.K. manufacturing production in May was released at -0.8% m/m and -2.9% y/y, worse than the expectations of 0.3% and -1.6%
Later, the pound dropped further to a 3 year low at 1.4814 as IMF said ‘small upward revision to U.K. growth forecast does not change fundamental picture of weak economy’ but price then staged a recovery in U.S. afternoon.
In other news, IMF trimmed 2013 global growth forecast to 3.1% from 3.3% in April and cut 2014 forecast to 3.8% from 4%. It said ‘lowered forecast due to slowdown in emerging markets, longer recession in euro zone; raises forecast for Japan due to recent monetary stimulus, expects 2% expansion in 2013, 1.2% next year; downside risks dominate; end of monetary stimulus in U.S. could trigger tighter financial conditions.’ Portugal opposition socialist leader said ‘must hold elections, government has created serious crisis; country needs new bailout program.’
[B]Data to be released on Wednesday: [/B]
Australia Westpac consumer confidence, import Japan domestic CGPI, tertiary industrial index, consumer confidence, China trade balance, export, Germany CPI, HICP, France current account, industrial production, manufacturing production, Italy industrial production, U.S. wholesale inventories, wholesale sales and FOMC minutes.