[B]Market Review[/B] - 12/03/2014 [I]20:31GMT[/I]
[B]The single currency rises on Wednesday after ECB’s official comments[/B]
The single currency rose against U.S. dollar on Wednesday and re-tested last Friday’s 2-1/4 year high at 1.3915 after a senior European Bank official said there are no signs of deflation in the euro zone.
During the day, although the single currency retreated to 1.3844 in European morning, renewed cross-buying limited intra-day losses there and price later rose to 1.3915 (last Friday’s 2-1/4 year peak) in New York on ‘euro-positive’ comments from ECB executive board member Benoit Coeure.
ECB’s Coeure said on Wednesday that ‘we don’t see deflation in the euro zone; we see deflation as a risk, and we have to be ready to act; we may have situation where level of excess liquidity is not appropriate to monetary policy stance, would have to inject more liquidity; that is not the case now; different contingencies would call for different policy instruments; development of ABS market is probably beyond remit of monetary policy, European commission should lead it.’
Versus the Japanese yen, although dollar rebounded after marginal weakness below Tuesday’s low at 102.84 to 102.79 in Australia on Wednesday, renewed cross-buying of yen due to risk aversion amid lingering concerns over the health of China’s economy and escalating tensions over the crisis in Ukraine capped intra-day gain at 103.10 in Asia and the pair later fell further to 102.62, then 102.55 in New York morning before recovering.
Ukraine’s interim Prime Minister Arseniy Yatsenyuk was to travel to the U.S. to meet President Barack Obama on Wednesday, as diplomatic efforts to resolve the crisis continued.
Cable moved in a choppy fashion on Wednesday as despite falling from European morning high of 1.6636 to a fresh 2-week low at 1.6568 on risk-off trade ahead of New York opening, price rebounded strongly in tandem with euro to 1.6627 in New York before stabilizing.
On the data front, report showed that euro zone industrial production was down 0.2% in January from a month earlier, dragged down by a 2.5% drop in energy output. However, the underlying trend remained strong, with industrial output rising 2.1% on a year-over-year basis, after rising at an annual rate of 1.2% in December.
The Reserve Bank of New Zealand raised its benchmark cash rate by 25 basis points to 2.75%, as widely expected, and flagged a series of further increases to keep inflation pressures in check as the economy gains momentum.
[B]Data to be released on Thursday: [/B]
Australia employment change, unemployment rate, Japan machine orders, China fixed assets exclude rural, retail sales, industrial production, U.K. RICS house price balance, France HICP, CPI, Italy HICP, Canada capacity utilization rate, new housing price index, U.S. retail sales, initial jobless claims, import price index, business inventories.