[B]Market Review [/B]- 09/10/2013 [I]22:26GMT [/I]
[B]Data to be released on Thursday : [/B]
New Zealand PMI, Australia Employment change, Unemployment rate, Japan Tertiary industry index, Machinery orders, Consumer confidence, UK BOE asset purchase target, rate decision, Germany Import price index, France industrial production, manufacturing production, Italy Industrial production, Canada New housing price index, jobless claims.
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Dollar strengthens broadly on Yellen’s nomination as next Fed chief[/B]
The greenback rose against other major currencies on Wednesday amid relief buying on news that Federal Reserve Vice Chair Janet Yellen will replace Ben Bernanke as the head of the U.S. central bank.
Although the single currency briefly climbed to 1.3605 in Australian morning, dollar’s broad-based firmness after news of Yellen’s nomination as next Fed chief pressured price from there and the pair ratcheted lower in Asian trading. Euro traded sideways ahead of European opening and then fell to 1.3516 in Europe before recovering to 1.3536 on better-than-expected German industrial production (1.4% m/m and 0.3% y/y, versus forecast of 1.0% and -1.4%). Later, the pair dropped again in New York trading and tumbled to session low of 1.3486 after the release of mildly hawkish Fed’s minutes.
Minutes of Sept meeting stated 'U.S. Fed decision not to reduce bond buying ‘a relative close call for several voting members; most participants judged it would likely be appropriate to stat to taper QE3 this year, end it in mid-2014; concerns raised about effectiveness of FOMC communication given market expectations for reduction of QE; all FOMC member but one wanted more evidence of sustainable economic progress before trimming QE; a numbers stressed contingent, data-dependent nature of QE; members worried tighter financial condition could slow economy, labour market; participants discussed difficulties of explaining cut to QE in coming absent clearly stronger economic data; a few participants preferred to cut only treasuries buys when time comes.’
The British pound initially bounced to 1.6122 against the dollar ahead of Asian opening on Wednesday and then retreated in Asia. The pair continued to move lower in Asia and then tumbled below 1.6000 level in Europe after release of weaker-than-expected U.K. industrial production and manufacturing production data. Later, cable dropped further in New York trading and fell to 1.5916 in New York afternoon before recovering.
U.K. industrial production in August came in at -1.1% m/m n -1.5% y/y, vs the forecast of -0.4% m/m n -0.6% y/y, previous reading revised to 0.1% m/m n -1.1% y/y. U.K. manufacturing production in August came in at -1.2% m/m n 0.2% y/y, versus the expectation of 0.4% m/m n 1.0% y/y, previous reading revised to -0.3% y/y.
Versus Japanese yen, the greenback found support at 96.83 in Australia morning and then ratcheted higher in Asian session due to dollar’s broad-based rebound. The pair climbed to 97.47 in European trading but renewed cross-buying of yen versus other currencies pressured price to 97.12 in New York morning. Later, dollar briefly rose to a session high at 97.65 in New York afternoon after relese of FOMC minutes before retreating near New York close.
In other news, ECB’s Asmussen says ‘don’t have an exchange rate target, but look at its impact on economy; we still have room to move on interest rates; still have whole array of non-standard measures available.’