[B]Market Review - 18/07/2013 [I]22:25GMT[/I][/B]
[B]Dollar strengthens against yen on upbeat U.S. economic data[/B]
The greenback rose against yen on Thursday as the strong U.S. jobless claims and Philadelphia Fed survey fueled speculation that the Federal Reserve will reduce stimulus measures by the end of this year. Later in U.S. afternoon, the single currency rebounded strongly due to the news that Portugal ruling coalition defeated a motion of no confidence against the government in parliament.
Versus the Japanese yen, the greenback rose strongly from Asian low at 99.47 on active cross selling of yen versus euro, price gained to 100.35 in European morning before retreating to 99.96, however, dollar’s broad-based strength due to the upbeat U.S. jobless claim and Philadelphia Fed survey pushed the pair further higher to 100.66 in New York morning before stabilizing.
U.S. initial jobless claims came in at 334K, better than the forecast of 345K. Philadelphia Fed survey in July was reported at 19.8, much stronger than the forecast of 7.8.
The single currency dropped to 1.3091 in Asia on dollar’s strength before staging a recovery to 1.3122 in European morning on cross buying of euro versus other currencies. Later, the rise of dollar due to the strong U.S. data pressured euro further lower to 1.3066 at New York midday but the pair then rebounded strongly to 1.3120 in U.S. afternoon on the news that Portugal ruling coalition defeated no confidence motion against government in parliament vote.
Although the British pound edged lower in tandem with euro in Asia and dropped to 1.5158 in European morning, the pair rose strongly to 1.5244 after the release of better-than-expected U.K. retail sales (0.2% m/m and 2.2% y/y, versus the forecast of 0.2% and 1.7% respectively) but then retreated to 1.5182 in New York morning, however, price staged a recovery to 1.5229 in New York afternoon due to the rise in eur/usd.
In other news, IMF’s Lagarde said ‘monetary policy “cannot be a substitute” for reforms; some countries are doing enough on fiscal policies; there has been “significant improvement” in euro area.’ German Finance Minister Schaeuble said ‘Greece must “stick to” what’s been decided; impressed with Greek progress on finances; another Greek haircut could destroy confidence.’ Portugal’s Prime Minister Coelho said ‘estimate economy may have grown in second quarter; need to exit bailout programme as planned in controlled n credible fashion.’ Fed’s Bernanke said ‘sees costs n risks to QE; FOMC confident won’t raise rates before thresholds; market interpretations also affect rates; we are not planning at this point to sell any MBS; most evidence indicates that asset purchases have a meaningful impact of hiring, provided important boost to U.S. economy at a critical times; financial stability the risk of QE that the Fed paying most attention to.’
[B]Data to be released on Friday: [/B]
Japan all industrial index, leading indicators, Germany PPI, Italy industrial orders, U.K. public sector net cash requirement, public sector net borrowing, Canada CPI.