Market Review - 16/07/2013 [I]22:29GMT[/I]
[B]Dollar ratchets lower ahead of Bernanke testimony[/B]
The greenback edged lower against other currencies on Tuesday as investors expected the Federal Reserve Chairman Ben Bernanke will reiterate in his testimony on Wednesday that the stimulus measures will continue this year.
Despite dlr’s initial bounce to 100.07 against the Japanese yen ahead of Tokyo open, price dropped to 99.65 in Asian morning before staging a recovery to 99.95 in Europe. Later, dollar’s broad-based weakness pressured the pair to 99.25 but then price recovered to 99.65 in New York morning after the release of better-than-expected U.S. NAHB housing market index (57 versus the forecast of 51). However, renewed selling interest sent dollar further lower to session low ay 98.89 near New York close.
The single currency edged higher to 1.3099 in European morning but then dropped to 1.3051 after the release of German ZEW economic sentiment and current condition, which came in at 36.3 and 10.6 versus the expectations of 39.6 and 9.0. Later, price rose strongly to 1.3138 in New York morning on dollar’s broad-based weakness before a pullback to 1.3095 after the release of U.S. industrial output, which came in at 0.3%, better than the forecast of 0.2%. However, renewed buying interest pushed the pair to session high at 1.3174 near New York close.
In U.S. morning, the single currency was pressured after the release of U.S. CPI, which came in at 0.5% m/m and 1.8% y/y, higher than the forecast of 0.3% and 1.7% respectively.
Although the British pound rose to 1.5143 in European morning, the pair fell sharply to a low at 1.5045 after the release of lower-than-expected U.K. inflation data. U.K. CPI in June came in at -0.2% m/m and 2.9% y/y, lower than the expectation of -0.1% and 2.9% respectively. RPI in June was released at -0.1% m/m and 3.3% y/y, lower than the forecast of 0.0% and 3.4% respectively. Later, price staged a strong rebound to 1.5122 due to dollar’s broad-based decline and price then rose further to 1.5169 near New York close.
In other news, BOE’s Fisher said ‘reasonably optimistic can get exit strategy right in U.K. forward guidance may help; BOE will need to reverse process of asset purchases, including holding to maturity and selling back assets; all discussions at BOE are about QE and giving more stimulus rather than exit.’ Fed’s George said ‘U.S. labor markets have struggled greatly in the economic recovery; U.S. economy faces headwinds, including fiscal policy drag, but is slowing progress and is on steady growth path; would like to see Fed systematically taper bond buying at pace that ends it at some point in the first half of 2014; reducing bond buying in Sep and ending them next year appropriate if economy develops as expected.’
[B]Data to be released on Wednesday :[/B]
Australia Westpac leading economic index, U.K. BOE MPC minutes, Claimant count, average earning, ILO employment rate, EU current account, Swiss ZEW index, U.S. housing starts, housing permit, Canada rate decision.