[B]Market Review[/B] - 04/09/2013 [I]22:24GMT[/I]
[B]Euro rises on short-covering ahead of ECB rate decision[/B]
The single currency strengthened against dollar on Wednesday as investors unwound their recent short positions ahead of the European Central Bank rate decision and the much-monitored press conference by ECB President Draghi for clues on any future policy move by the central bank.
Earlier in Asia, the single currency moved narrowly following a recovery from Tuesday’s 6-week low at 1.3138, price dipped briefly to 1.3157 in European morning, however, renewed buying there lifted the pair to 1.3187 and cross buying of euro versus yen and Swiss franc pushed euro higher to 1.3218 in New York morning, price later traded narrowly before easing near the close.
Versus the Japanese yen, although the greenback rose from Asian low at 99.42 to 99.80 in European morning due partly to the rise in Japanese equities, failure to penetrate Tuesday’s top at 99.86 prompted profit-taking and price dropped to a low at 99.32 in New York morning before staging a rebound on renewed cross selling of yen versus euro. The Bank of Japan will end its 2-day policy meeting around midday on Thursday.
The British pound traded narrowly in Asia and then rose strongly above Tuesday’s top at 1.5605 to a high at 1.5632 in European morning after release of better-than-expected U.K. PMI service (60.5 versus the forecast of 59.0) before retreating to 1.5595 in New York morning, however, renewed buying interest due to intra-day rebound in eur/usd pushed the pound higher to 1.5648 before easing. The Bank of England also ends its 2-day policy meeting later today.
The Australian dollar rallied throughout Tuesday’s Asian, European and New York sessions due to the upbeat Australian GDP and Chinese HSBC service PMI, which came in at 2.6% vs previous reading of 2.5% and 52.8 versus the previous 51.3 respectively. The pair eventually surged to a 2-week high of 0.9188 in New York morning before retreating on profit-taking.
On the data front, German Service PMI (final) in August came in at 52.8, stronger than the forecast of 52.4. Euro zone Service PMI (Final) in Aug came in at 50.7, worse than the forecast of 51.0. Euro zone GDP in Q2 came in at 0.3% Q/Q and -0.5% Y/Y, versus the expectation of 0.3% and -0.5% respectively. Euro zone Retail sales in July were at 0.1% and -1.3%, worse than the market expectations of 0.4% and -0.4%.
[B]Data to be released on Thursday: [/B]
Australia trade balance, Japan rate decision, U.K. employment confidence, BOE rate decision, asset purchases, Germany factory orders, France unemployment rate, ECB rate decision, U.S. ADP employment, jobless claims, factory orders, ISM non-manufacturing, durable goods.