[B]Market Review[/B] - 19/10/2013 [I]00:51GMT [/I]
[B]Dollar weakens broadly on dimming hopes of Fed tapering[/B]
The greenback fell against it peers on Friday as the negative impact of the two-week U.S. government shutdown sparked speculation that the Federal may not scale back its bond purchases in the near future.
The single currency traded narrowly in Asia following previous day’s rally. Price then rose above Thursday’s high at 1.3682 to a fresh 8-1/2 month high of 1.3704 in European morning on dollar’s broad-based weakness. However, failure to re-test 2013 peak at 1.3711 (February) prompted profit talking, the pair briefly retreated to 1.3669 in New York morning and then euro rebounded to 1.3699 before trading narrowly in New York afternoon.
Versus Japanese yen, although the greenback staged a recovery initially at Tokyo open to 98.15, renewed selling interest there pushed price lower in Asian session. Dollar fell to session low of 97.55 at European midday on dollar’s broad-based weakness before rebounding to 97.92 in New York afternoon.
The British pound traded narrowly in Asian morning and met buying interest at 1.6142. Cable then climbed at European open and rose to intra-day high of 1.6225 in European morning due to active cross-buying of sterling versus euro. However, long liquidation pressured price lower, cable retreated to 1.6159 at New York midday and moved sideways.
In other news, Bank of Japan’s Governor Haruhiko Kuroda said ‘effects of BoJ policy firmly emerging in economy; see positive trends of economy and prices; Japan economy is recovering moderately; Japan economy will continue moderate recovery; will continue with QE as long as necessary to maintain inflation target in stable manner; annual gains in CPI will rise gradually with improvement spreading to broad items.’
Bank of England Chief Economist Spencer Dale said ‘interest rate not on hold for “fixed period”; rate depends on growth and inflation outlook; BoE’s QE plan has supported real output; BoE-stimulus to be unwound “with great care”; subdued wages and low housing transactions make BoE forward guidance knock outs not that likely just yet; very unlikely that we will raise bank rate in 2014, we need to see sustained period of strong growth’
On the data front, China GDP year-to-date in Q3 came in at 7.7%, same as the forecast. China industrial production in September came in at 10.2% y/y, same as the expectation. China retail sales in September came in at 13.3% y/y, worse than the economists’ forecast of 13.4%. Canada CPI in September came in at 0.2% m/m and 1.1% y/y, more than the forecast of 0.1% and 1.0% respectively.
[B]Data to be released next week : [/B]
Japan import, export, trade balance, all industry index, leading indicators, U.K. Rightmove house prices, Germany PPI, U.S. Chicago Fed index, existing home sales, Canada wholesale sales on Monday.
Swiss trade balance, U.K. PSNCR, public sector net borrowing, Canada retail sales, Delayed release of September U.S. non-farm payrolls, private payrolls, unemployment rate, average hourly earnings and Redbook retail sales on Tuesday.
EU consumer confidence, France business climate, U.K. BOE releases MPC minutes, BOE MPC vote, BBA loans for house purchase, U.S. house price index, Canada BOC rate decision on Wednesday.
New Zealand Trade balance, exports, imports, China HSBC Flash manufacturing PMI, France PMI manufacturing, PMI service, Germany PMI manufacturing, PMI service, EU PMI manufacturing, PMI service, Italy consumer confidence, U.K. CBI industrial trend, U.S. jobless claims, Markit PMI, new home sales on Thursday.
Japan national CPI, Tokyo CPI, Germany Ifo current assessment, Ifo business climate, U.K. GDP, U.S. durable goods, ex. Transport, ex. Defense, University of Michigan consumer confidence on Friday.