[B]Market Review - 25/06/2013 [I]22:20GMT[/I][/B]
[B]Dollar strengthens broadly due to upbeat U.S. data[/B]
The greenback rose against major currencies in New York morning on Tuesday as solid U.S. durable goods, new homes sales and consumer confidence showed the U.S. economy is improving at a steady pace, spurring the expectation that the Federal Reserve will reduce its stimulus measures by the end of this year.
Although the single currency rose from Asian low at 1.3109 to 1.3151 in European morning on renewed risk appetite as China’s equities pared its early losses, the pair retreated from 1.3143 in New York morning due to the dovish comments from ECB’s Draghi together with the upbeat U.S. durable goods (3.6% versus the forecast of 3.0%), price dropped further to an intra-day low at 1.3065 after the released of better-than-expected U.S. new homes sales and consumer confidence (0.476M and 81.4, versus the expectations of 0.462M and 75.4) before staging a recovery in U.S. afternoon.
ECB’s President Draghi said ‘economic outlook still warrants an accommodative monetary policy stance; see some signs of stabilization in sentiment, even through uncertainties remains; OMT essential now as we see potential changes in monetary policy stance, with associated uncertainty, elsewhere in world; exit from accommodative monetary policy is still distant as inflation is low, unemployment high.’
Despite dollar’s brief rise to 98.07 against the Japanese yen in Asian morning due to the gain in Nikkei-225 index, active cross buying of yen versus euro pressured the pair below Monday’s low at 97.21 to 96.95 in European morning, however, dollar’s broad-based strength due to the upbeat U.S. data lifted price to 98.03 in New York morning before stabilising.
The British pound traded narrowly in Asia and rose briefly to 1.5480 in New York morning, dollar’s strength pressured the pair to a low at 1.5397 before staging a recovery to 1.5436 at U.S. midday.
In other news, ECB’s Coeure said ‘our exit is distant and our monetary policy will remain accommodative.’ BoE’s Bean said ‘adverse affect of bank rate cut might be tempered with scheme with graduated remuneration of reserves.’ BOE King said ‘senior government officials have come under immense pressure from banks to lobby BoE on bank regulation; will not be sensible to return interest rates to normal levels until there is sustainable recovery; will be serious solvency problems at banks if debt levels not reduced before rates increase.’
[B]Data to be released on Wednesday: [/B]
Germany Gfk consumer confidence, Swiss UBS consumption indicator, France GDP, U.S. GDP, personal consumption, PCE core.