[B]Market Review[/B] - 03/10/2013 [I]22:24GMT[/I]
[B]Dollar weakens after ISM data and U.S. budget worries[/B]
The greenback weakened against euro and yen on Thursday as demand for the greenback remained under pressure after disappointing U.S. service sector data and amid ongoing U.S. budget worries.
The single currency moved above Wednesday’s high at 1.3608 to 1.3624 in Asian session before retreating to 1.3589 in European morning. Later, Euro rebounded to 1.3616 after release of stronger-than-expected euro zone retail sales, which came in at 0.7% m/m and -0.3% y/y versus the forecast of 0.2% n -1.5% respectively, and then dropped to 1.3587 in New York morning. However, the pair found renewed buying interest there and ratcheted higher above Asian high to 1.3627 on U.S. budget worries and weaker than expected ISM non-manufacturing data, climbed to 8-month fresh high at 1.3646 in New York midday.
U.S. ISM non-manufacturing in September came in at 54.4, worse than economists’ forecast of 57.0.
Versus Japanese yen, the greenback found renewed buying interest at Asian low at 97.26 and lifted to a session high at 97.88 in European trading on cross-selling yen versus other currencies. However, worries of U.S. budget and weaker-than-expected ISM data pushed the pair sharply lower to a session low at 96.93 in New York trading.
The British pound traded narrowly in Asian session and then dropped to 1.6192 in European morning. Cable rebounded to 1.6234 after the release of better-than-expected U.K. service PMI (60.3 versus the expectation of 60.0) before edging lower in European midday. Later, the pair dropped to session low at 1.6155 near New York close.
In other news, Fed’s Williams said 'very accommodative monetary policy will be appropriate for quite some time; U.S. unemployment is still too high, inflation too low; will be appropriate to trim, end bond buys as economy improves; do not expect it will be appropriate to raise short-term rates until second half of 2015.’ U.S. treasury department said 'U.S. default on obligations could cause credit market to freeze, dollar to plummet, U.S. interest rates to skyrocket; U.S. default might trigger a financial crisis and a recession that "could echo the events of 2008 or worse U.S. labor department confirms monthly jobs report will not be issued on Friday, says an alternative release date has not be set.
On the data front, U.S. jobless claims came in at 308K, better than the forecast of 313K, previous reading is revised to 307K. German service PMI in September came in at 53.7, worse than the forecast of 54.4. Euro zone service PMI in September came in at 52.2, better than expectation of 52.1.
[B]Data to be released on Friday: [/B]
Japan BOJ rate decision, Germany PPI, U.K. employment confidence, Canada Ivey PMI on Friday.China financial market is closed due to public holiday.