[B]Market Review[/B] - 13/11/2013 [I]22:27GMT [/I]
[B]Dollar falls on Yellen’s dovish comments[/B]
U.S. dollar tumbled broadly against major currencies on Wednesday after Federal Reserve Vice Chair Janet Yellen said the U.S. economy was performing ‘far short’ of potential, suggesting the central bank is in no rush to withdraw its stimulus.
The single currency rose to 1.3453 in Asian trading and then retreated to 1.3408 in European morning. Euro rose to 1.3554 in New York morning before falling to a session low at 1.3390 after the comment from ECB’s executive broad member Peter Praet. However, renewed buying interest there lifted price to an intra-day high at 1.3471 in New York afternoon and then 1.3496 after the release of dovish remarks fm Fed’s vice chairman Janet Yellen.
ECB’s executive board member Peter Praet, quoting from Wall Street Journal, said ‘central banks can use balance sheet capacity to lift inflation, including outright asset purchases; ECB still has room in standard measures, including deposit facility.’
Versus Japanese yen, the greenback edged lower in Asian and European Sessions on downbeat comment from Bank of Japan’s Ryuzo Miyao, who said 'Japan’s economy is recovering moderately; Focusing somewhat more on downside risks to Japan economy; Japan so far on track to meeting BOJ’s 2% price target’. Dollar fell to 99.30 in New York morning and further dropped to an intra-day low of 99.19 in New York afternoon.
The British pound traded narrowly in Asian trading and found support at 1.5879 in European morning. Cable rose to 1.5942 after the release of stronger-than-expected unemployment data and then jumped to 1.6003 due to upbeat Bank of England’s inflation report before retreating to 1.5939. However, renewed buying interest lifted price higher in New York morning and climbed to 1.6048 in New York afternoon n then 1.6067 due to the dovish remarks fm Fed’s vice chairman Janet Yellen.
U.K. jobless claims in October came in at -41.7K, better than the forecast of -30.0K, previous reading was revised to -44.7K. U.K. unemployment rate in Sep came in at 7.6%, same as expectation.
Bank of England November inflation report stated ‘U.K. recovery has finally taken hold, economy growing robustly but significant headwinds remain; MPC intends to keep exceptionally simulative policy stance until slack has reduced substantially; unemployment likely to fall more quickly than forecast in August, hitting 7% threshold will not necessarily trigger rate rise; MPC sees 41% chance of 7% unemployment at end-2014, 57% at end-2015, 68% at end-2016 based on market interest rates; mean unemployment forecast above 7% through to Q4 2016, based mean unemployment forecast falls to 7.0% in Q4 2014, based on constant interest rate (Aug inflation report: above 7% through to Q3 2016; sees greater than 50% chance unemployment will reach 7% at some point before end of Q3 2015 based on market interest rates; sees 50% chance unemployment will reach 7% at some point before end of Q4 2014, based on constant interest rates (Aug forecast: Q2 2016; shows inflation to first fall below 2% target in Q1 2015 (Aug forecast Q3 2015), based on market rate expectation; forecast shows around one in three chance inflation will exceed 2.5% knock-out in 18-24 months (Aug forecast C.40%); mean growth forecast sees GDP in 2013 +1.6% (Aug +1.4%), 2014 +2.8%% (Aug +2.5%), 2015 +2.3% (Aug +2.3%).’
[B]Data to be released on Thursday: [/B]
New Zealand business PMI, ANZ consumer confidence, Japan GDP, industrial production, capacity utilisation, France GDP, Germany GDP, France HICP, CPI, Italy GDP, U.K. retail sales, EU GDP, U.S. jobless claims, Canada new housing price index, trade balance, exports and imports.