[B]Market Review - 02/03/2013 [I]00:29GMT[/I][/B]
[B]Dollar rises broadly on upbeat U.S. data[/B]
The greenback strengthened against other currencies on Friday as the strong U.S. consumer confidence and manufacturing PMI showed signs of economy recovery.
Earlier in Asia, although the single currency staged a recovery after Thursday’s selloff to 1.3053 near New York close after dovish comments by Chicago Fed President Charles Evans, euro extended intra-day recovery in early European trading and rose briefly to 1.3101. The pair then fell sharply fm there to 1.3022 due to the selloff in gbp/usd. Later, dollar’s broad-based strength in New York morning after release of a slew of strong U.S. economic data pressured the pair further to a 6-1/2 week low of 1.2966 before staging a strong recovery to 1.3042 on broad-based short-covering in euro, especially versus yen (eur/yen rallied fm 120.36 to 122.17).
U.S. consumer confidence in February came in at 77.6, better than the forecast of 76.3 and the previous 76.3. ISM manufacturing index in February was reported at 54.2, versus the expectation of 52.8 and 53.1 in January.
Earlier in European session, the single currency was under pressure due to weak EU data. Eurozone unemployment rate came in at 11.9%, higher than the forecast of 11.8%. Eurozone, France and Italy manufacturing PMI were released at 47.9, 43.9 and 45.8, holding below the 50 level that divides growth from contraction.
The British pound traded narrowly below 1.5186 in Asia but then nose-dived to 1.5013 in European morning after the release of much weaker
-than-expected U.K. manufacturing PMI which showed British manufacturing activity shrank unexpectedly in February. The data came in at 47.9, the first contraction since November 2012, versus the forecast of 50.5 and revised at 50.5. Price dropped further in tandem with euro to a fresh 2-1/2 year low at 1.4985 in New York morning before staging a recovery to 1.5044 on short-covering.
Versus the Japanese yen, although the greenback edged lower from Thursday’s high at 92.85 and dropped to 92.44 ahead of Euroepan open, broad-based strength in dollar pushed the pair above 92.85 to 93.03 in Europe but only to retreat to 92.62. Later, the strong U.S. consumer sentiment and ISM manufacturing gave the pair a boost and pushed price to 93.50 in New York morning. The pair eventually climbed to session high of 93.68 in U.S. afternoon on cross selling of yen versus other currencies.
In other news, U.S. President Obama said ‘urged Congressional leaders to compromise over looming budget cuts; not everyone will feel the pain of these cuts right away, but pain will be real; may take a couple of weeks or months for Republicans to agree to more talks on tax loopholes.’ S&P said ‘sequestration cuts should have limited effect; spending cuts could have fair-reaching through shallow effects on U.S. economy; sequester will be temporary, with only a mild downside effect on 2013 GDP.’ Fitch said ‘sequestration manageable for U.S. public finance entities.’
[B]Data to be released next week : [/B]
Australia Building Approvals, EU Sentix investor confi., PPI, U.K. PMI construction, Lloyds business barometer, Hometrack housing on Monday.
U.K. BRC retail sales, Australia Current account, Retail sales, RBA rate decision, China HSBC Serives PMI, Italy services PMI, France services PMI, Germany PMI service, EU PMI service, Retail sales, U.K. BoE/Gfk inflation, PMI service, U.S. ISM non-manufacturing on Tuesday.
U.K. BRC shop price index, Australia GDP, EU GDP, U.S. ADP employment, Factory orders, Canada BOC rate decision, Ivey PMI on Wednesday.
Australia Trade balance, Japan BOJ rate decision, Leading indicators, Swiss Unemployment rate, France unemployment rate, trade balance, Italy PPI, Germany factory orders, U.K. BOE rate decision, BoE asset purchase target, ECB rate decision, U.S. trade balance, Jobless claims, Building permits on Thursday.
Japan GDP, GDP deflator, Current account, Economic watch DI, China Trade Balance, Exports, Imports, Swiss CPI, Germany Industrial production, U.S. Private payrolls, Non-farm payrolls, Unemployment rate, Average hourly earnings, Wholesale inventories, Canada unemployment rate, Net change in employment, Housing starts on Friday.