[B]Market Review[/B] - 03/09/2013 [I]22:24GMT[/I]
[B]Dollar pares gains as U.S. legislators backs military action in Syria [/B]
The greenback pared its early gains versus yen and euro on Tuesday after U.S. Congressional leaders voiced their support for President Obama’s recent call for limited military intervention in Syria. U.S. House speaker Boehner says ‘use of chemical weapons in Syria has to be responded to, only the U.S. has the capacity to stop Assad; will support Obama’s call for action in Syria, believes colleagues should do the same; U.S. allies need to know America will stand up when necessary.’
Versus the Japanese yen, dollar went through a roller-coaster session on Tuesday, although the pair extended recent gain to 99.68 at Tokyo open due to the rally in Japan’s Nikkei index but then retreated to 99.32, price rose marginally higher to 99.70 in European morning but retreated sharply to 99.17 on news that Russian Defence Ministry as it said ‘detected two ballistic “objects” fired toward Eastern Mediterranean.’ Later, dollar staged another rebound as the Russian embassy in Syria said ‘no sign of missile attack or explosions in Damascus after ballistic launches detected’ and eventually climbed to a 1-month top at 99.86 in New York morning after the release of better-than-expected U.S. construction spending and ISM manufacturing but only to tank to 99.24 in New York afternoon after comments from Republican House Speaker John Boehner expressing support for strike action in Syria.
U.S. construction spending came in at 0.6%, versus the forecast of 0.4% and the revised 0.0% in Jun. U.S. ISM manufacturing PMI came in at 55.7, better than the market expectation of 54.0.
The single currency traded narrowly in Asia and dropped to 1.3161 in European morning. Later, despite euro’s brief recovery to 1.3187, dollar’s broad-based strength due to the upbeat U.S. construction spending and ISM manufacturing PMI pressured euro to a fresh 6-week low at 1.3138 in New York morning before climbing back to 1.3179 in New York afternoon.
The British pound edged higher to 1.5562 in Asia before a brief pullback to 1.5537. Later, although the pair rose strongly to a 1-week top at 1.5605 after the release of better-than-expected U.K. construction PMI (59.1 versus the forecast of 56.9), cross selling of sterling pressured price and cable fell sharply to 1.5522 in New York morning on dollar’s broad-based strength before recovering to 1.5573.
In other news, German Chancellor Merkel said ‘unusually challenging’ events over 4 years term; German debt reduction “sensational success”; her goal is further reducing joblessness; election is about extending German “success”; euro crisis caused by “broken promises”; pooling euro debt “won’t happen with us”.’ Spain’s Economic Minister Guindos said ‘Aug jobless claims show market stabilizing; leading indicators show positive signs; rule out further capital injections for nationalized banks.’
On the data front, eurozone PPI in July came in at 0.3% m/m n 0.2% y/y, versus the forecast of 0.1% and 0.1% respectively. U.S. Markit PMI final was 53.1, weaker than the forecast of 54.0.
[B]Data to be released on Wednesday : [/B]
Australia GDP, China HSBC Markit Service PMI, U.K. Service PMI, shop price index, France Service PMI, PPI, Italy Service PMI, EU Service PMI, GDP, retail sales, Germany Service PMI, Canada import, export, trade balance, rate decision, U.S. trade balance, retail sales on Wednesday.