[B]Market Review [/B]: Oct 7, 2013
[B]Data to be released this week: [/B]
[B]Monday : [/B]Japan Leading indicators, BOJ’s monthly economic report, Germany WPI, EU Sentix investor confidence, Canada Building permits. China financial market is closed due to public holiday.
[B]Tuesday :[/B] Australia NAB business condition, NAB business confidence, Japan Current account, Economic watch DI, China HSBC Markit Service PMI, Swiss Unemployment rate, CPI, retail sales, UK BRC retail sales, RICS house prices, Germany Trade balance, current account, export, import, factory orders, France trade balance, Canada housing starts, trade balance, exports, imports, US trade balance, redbook retail sales.
[B]Wednesday : [/B]Australia Westpac consumer confidence, Japan Machine tools orders, UK Industrial production, Manufacturing production, trade balance, Germany Industrial production, U.S. Wholesale inventories, Wholesale sales, FOMC minutes.
[B]Thursday : [/B]New Zealand PMI, Australia Employment change, Unemployment rate, Japan Tertiary industry index, Machinery orders, Consumer confidence, UK BOE asset purchase target, MPC rate decision, Germany Import price index, France industrial production, manufacturing production, Italy Industrial production, Canada New housing price index, U.S. Import price index, export price index, jobless claims, Fed budget.
[B]Friday : [/B]Japan Domestic CGPI, Germany CPI, HICP, France current account, Italy CPI, HICP, Canada Unemployment rate, U.S. PPI, retail sales, University of Michigan consumer confidence, business inventories.
[B]Dollar rebounds on weekend short-covering[/B]
Dollar strengthened broadly against the major currencies as investors locked in their profits on Friday, although concerns over the partial U.S. government shutdown still weighed on the greenback.
During the day, the single currency traded in a relatively narrow range below Thursday’s near 8-month peak at 1.3646 in Asia and then came under pressure in Europe on long liquidation. Euro dropped to 1.3580 in New York morning and intra-day decline accelerated once support at 1.3577/87 was penetrated due to dollar’s broad based rebound at European closing, price tumbled to session low of 1.3538 before stabilising in New York afternoon.
Versus Japanese yen, the greenback initially rebounded to 97.40 in Asian morning and then retreated after the Bank of Japan decided to hold its monetary policy unchanged, dollar dropped to 96.96 in European morning but greenback’s broad-based rebound in New York trading lifted price. The pair later climbed to a fresh session high of 97.49 in New York afternoon and closed near its day’s high.
Bank of Japan’s governor Haruhiko Kuroda says 'BoJ will take policy response if overseas tail risks threaten Japan’s recovery; current BoJ easing is enough to meet BoJ’s policy target; government stimulus package will give significant boost to Japan’s GDP growth.’
The British pound briefly recoevred to 1.6179 in Asian midday following Thurday’s decline but cross-selling of sterling (especially versus euro and yen) quickly knocked price lower. investors continued to lock in their recent profits and sent cable tumbling to a one-week low of 1.6006 near New York close.
In other news, Fed’s Fisher said ‘the decision not to taper bond-buying in Sep was a “close call”; I personally feel the effectiveness of buying treasuries “isn’t that high” and costs are large; I don’t believe we would dare default; a default would disturb the entire financial market.’ Fed’s Lacker said ‘Fed policy actions cannot necessarily counteract the effects fiscal policy uncertainty, falling productivity growth; recent recovery has shown “significant limits” on power on monetary policy to affect real economy.’
On the data front, Canada Ivey PMI (Sep) came in at 51.9, worse than the forecast of 52.9; EU PPI (Aug) came in at 0.0% m/m n -0.8% y/y, vs the forecast of 0.1% m/m n -0.6% y/y, previous reading is revised to 0.2% m/m n 0.0% y/y. Germany PPI (Sep) came in at -0.1% m/m n -0.5% y/y, vs the forecast of 0.1% m/m n 0.1% y/y.