[B]Market Review[/B] - 06/11/2013 [I]21:44GMT [/I]
[B]Euro rebounds on short-covering ahead of ECB rate decision[/B]
The single currency rebounded on Wednesday due to active short-covering ahead of ECB’s rate decision on Thursday as the release of stronger-than-expected German industry orders affirmed markets’ expectations that the European Central Bank will not cut interest rates this week despite a steep fall in inflation.
Euro found renewed buying interest at 1.3469 in Asian session on Wednesday and price jumped to 1.3522 due to active short-covering together with cross buying versus the Japanese yen (eur/jpy rallied fm 132.55 to 133.72). Price rose further to 1.3533 in European morning partly due to the release of stronger-than-expected service PMI data and Germany factory orders. The single currency further strengthened to a session high at 1.3548 in New York morning before stabilizing.
Germany factory orders in September came in at 3.3% m/m n 7.9% y/y, much stronger than the forecast of 0.5% n 5.6% respectively. Germany Services PMI in October came in at 52.9, higher than the forecast of 52.3. Euro zone Services PMI in October came in at 51.6, better than the expectation of 50.9.
Versus Japanese yen, the greenback rose to a session high at 98.76 in Asian trading due to the rise in Japan’s stock markets (Nikkei-225 index closed up by 112 points at 14337). Dollar later retreated to 98.47 in European morning before rebounding to 98.74 in New York morning.
The British pound rose to 1.6097 in Asian trading before retreating to 1.6063. Cable later jumped to an intra-day high at 1.6118 after the release of stronger-than-expected U.K. industrial and manufacturing production before stabilizing in New York session.
U.K. industrial production in September came in at 0.9% m/m n 2.2% y/y, stronger than the forecast of 0.5% n 1.8% respectively; manufacturing production in September came in at 1.2% m/m n 0.8% y/y, better than the expectation of 1.1% n 0.7% respectively.
On the data front, U.S. leading index in September came in at 0.7%, better than the forecast of 0.6%. Euro zone retail sales in September came in at -0.6% m/m and 0.3% y/y, worse than the forecast of -0.4% and 0.7%, previous reading was revised to 0.5% and -0.2% respectively. Canada Ivey PMI in October came in at 62.8, much stronger than the expectation of 52.0.
[B]Data to be released on Thursday: [/B]
Australia employment change, unemployment change, Japan leading indicators, U.K. Lloyds employment confidence, BOE rate decision, BOE asset purchase target, Germany industrial production, ECB rate decision, U.S. GDP, personal consumption, PCE core and jobless claims.