[B]Market Review[/B] - 12/11/2013 [I]21:52GMT [/I]
[B]U.S. dollar rises versus Japanese yen on Fed tapering expectations[/B]
U.S. dollar rose to a 1-month high at 99.80 against the Japanese yen on rising speculation that Fed will sooner tapering its economic stimulus program next month.
The single currency edged lower in Asian trading and then fell to a session low at 1.3359 in European morning, however, renewed buying interest there lifted price higher due to the comment from ECB’s Nowotny. The pair later climbed to an intra-day high of 1.3456 in New York morning before stabilizing.
ECB Governing Council member Ewald Nowotny said ‘Deflation not imminent, must be on minds of central bank; there is a lot of nervousness in markets; Rate cut has to be seen in line with forward guidance; Price stability means close to but not above 2%; ECB has to fight both inflation and deflation; Debate was on timing, not substance of measures; Stagnation not inflation is real risk now; Forward guidance helps to stabilize markets.’
Versus Japanese yen, the greenback found support at 99.11 in Australian morning and then ratcheted higher in Asian session due to the rally of Nikkei index. Dollar later rose to intra-day high at 99.80 in European morning before stabilizing in New York trading.
The British pound met selling interest at 1.5992 in Australian morning and then dropped to 1.5965 in Asian trading. Cable later tumbled to session low at 1.5854 in European morning on weaker-than-expected U.K. CPI data which came in at 0.1% in October versus economists’ forecast of 0.3%. However, lack of selling through prompted short-covering and cable rebounded strongly to 1.5946 in New York morning before retreating.
In other news, U.S. Treasury Secretary Jack Lew says ‘data shows core strength of U.S. economy is continuing; calls recent U.S. economic data “quite encouraging”; U.S. economy ending year with “great optimism” Oct. debt-limit tactic likely won’t be used again.’
On the data front, Germany CPI in October came in at -0.2% m/m and 1.2% y/y, same as expectation. U.K. RPI in October came in at 0.0% m/m n 2.6% y/y, weaker than the expectation of 0.4% n 3.0% respectively. U.K. ONS house price in September came in at 3.8%, previous reading is revised to 3.7%.Chicago Fed index in September came in 0.14, worse than the forecast of 0.15, previous reading was revised to 0.13.
[B]Data to be released on Wednesday: [/B]
Australia Westpac consumer confidence, Japan machinery orders, domestic CGPI, U.K. claimant count, ILO unemployment rate, average earnings, BoE releases quarterly inflation report, EU industrial production and U.S. Fed budget.