[B]Market Review[/B] - 16/09/2013 [I]22:17GMT[/I]
[B]Dollar drops broadly as Summers withdrew from the race for Fed chief[/B]
The greenback weakened against other currencies on Monday as former Treasury Secretary Lawrence Summers, who was perceived by market as relatively hawkish, announced on Sunday to withdraw from the nomination to succeed Federal Reserve Chairman Ben Bernanke.
The single currency rose shortly after New Zealand open and climbed to 1.3382 in Australia on dollar’s broad-based weakness when the news came that Lawrence Summers, a former top aide to President Barack Obama and Treasury Secretary under President Bill Clinton, withdrew from nomination to succeed Federal Reserve Chairman Ben Bernanke on Sunday.
Euro then traded narrowly in Asia and dropped to 1.3340 in Europe on cross selling of euro versus yen but dollar’s decline after release of weaker-than-expected U.S. Empire State manufacturing index pushed the pair to a fresh 2-week top at 1.3385 in New York morning before retreating to 1.3330 on profit-taking.
U.S.'s Empire state manufacturing (Sep) came in at 6.29, weaker than the forecast of 9.00.
Versus the Japanese yen, the greenback opened lower and tanked to 98.45 in New Zealand on dollar’s weakness as former Treasury Secretary Summers withdrew from the race to be next Fed chief. Later, despite cross-induced recovery to 99.11 in Asia, the pair ratcheted lower to 98.70 in Europe and fell further to 98.65 in New York morning due to the weaker-than-expected U.S. Empire State manufacturing index before staging another bounce to 99.18 near New York close.
The British pound rose strongly to 1.5951 in New Zealand due to dollar’s broad-based weakness and edged higher to 1.5958 in Asian morning. Later, despite subsequent retreat to 1.5916 in European session, renewed buying interest pushed the pair to a fresh near 8-month top at 1.5963 in New York morning before profit-taking pressured price to 1.5895 near New York close.
In other news, ECB’s Praet said ‘euro zone recovery is still fragile; sees euro zone inflation moderate to mid-term; monetary policy aims at remaining accommodative.’ ECB’s Mersch said ‘we see very tentative green shoots for Europe economy, need to manage with great care; there are positive signs we see on horizon for world economic recovery; there is no consideration of interest hike by ECB anywhere in near future.’ ECB’s Draghi says ‘Euro zone economy remains fragile, unemployment far too high; given subdued inflation outlook, expect key interest rates to remain at current or lower levels for extended period of time; Euro zone recovery “fragile”.’
On the data front, EU CPI came in at 0.1% m/m and 1.3% y/y and CPI core was 1.1% y/y, same as the expectations. U.S. industrial production in August came in at 0.4%, versus the forecast of 0.4%. U.S.'s capacity utilisation was 77.8%, versus the expectation of 77.9%.
[B]Data to be released on Tuesday:[/B]
Australia RBA September minutes, EU current account, economic sentiment, trade balance, U.K. PPI, RPI, CPI, ONS house price, Germany economic sentiment, current condition, U.S. CPI, retail sales, Net LT TIC flows, NAHB housing market index.