[B]Market Review[/B] - 24/03/2014 [I]19:20GMT [/I]
[B]Euro jumps to 1.3877 after Chinese President Xi urges a political resolution to the crisis in Ukraine[/B]
The single currency jumped to 1.3877 on short-covering after Chinese President Xi Jinping told U.S. President Barack Obama on Monday that a political resolution to the crisis in Ukraine would serve the interests of all sides. Investors bought euro on bets that tension over Ukraine won’t escalate into military action.
Xi added that the United States should “distinguish right from wrong” on the issue of China’s territorial disputes in the East and South China Seas.
Earlier in the day, although the single currency opened slightly higher in New Zealand to 1.3804 and traded sideways in Asia, price briefly rose to session high at 1.3827 in early European morning due to the release of better-than-expected France manufacturing and services PMIs. However, euro swiftly pared its gains and retreated sharply to 1.3769 and then lower to an intra-day low at 1.3760 ahead of New York open, weighed down by the release of weaker-than-expected German PMIs. Later, price rallied to 1.3877 in thin New York session after comments from Chinese President Xi Jinping.
On the data front, France Mar manufacturing PMI came in at 51.4, better than the expectation of 49.7. France Mar service PMI came in at 51.6, much stronger than the forecast of 47.5. German Mar manufacturing PMI came in at 53.8, worse than the forecast of 54.5. German Mar service PMI came in at 54.0, weaker than the forecast of 55.5.
Versus the Japanese yen, the greenback remained well bid in New Zealand and Australia and rose to 102.57 in Asian morning, helped by the rally in Nikkei. Despite a brief pullback to 102.34, dollar rose to an intra-day high at 102.65 in early European morning. However, price pared its intra-day gains and retreated to 102.13 in New York session on broad-based buying of Japanese yen before recovering.
Although the British pound opened lower to 1.6460 in New Zealand on Monday, price recovered to 1.6497 ahead of Asian open and traded sideways till European session. Cable briefly edged higher to session high at 1.6511 in European morning before falling again to 1.6466. Price later rebounded strongly to 1.6536 in thin New York session after Chinese President Xi Jinping’s a political resolution to the crisis in Ukraine.
In other news, BoJ’s deputy Governor Iwata said ‘among negative factors of deflation was effect of strengthening yen’s values, which hurt Japan export; not saying yen should be high or low, just saying policy makers must act if strong yen persists enough to cause job losses; BoJ is not aiming for inflation far exceeding 2%, instead aiming for stable inflation around 2%; risk of deflation will emerge if inflation runs below 1% for long period of time, which is why BoJ has 2% price target; 2% price goal doesn’t necessary have to be met strictly in yrs but setting time frame helps to show BOJ’s commitment vs price target.’
[B]Data to be released on Tuesday: [/B]
France business confidence, German IFO business climate, current assessment, expect, U.K. CPI, RPI, PPI, ONS house price, BBA loans for house purchase, CBI reported sales, U.S. Redbook retail sales, house price index, S&P house price, consumer confidence New home sales.