[B]Market Review - 21/02/2013 [I]21:41GMT[/I]
Euro falls to 6-week low on disappointing eurozone and German PMI data[/B]
The single currency tanked across the board and weakened to a fresh 6-week low versus usd on Thursday as the PMI surveys showed the manufacturing and services sectors in eurozone and Germany contracted at a faster pace than the economists’ expectations, indicating the economy in eurozone is struggling.
Earlier in Asia, the single currency edged lower from 1.3288 shortly after Asian open on risk aversion due to selloff in Asian equities and euro then tumbled to 1.3168 in European morning after release of weaker-than-expected, France, Germany and eurozone PMI data. Despite a recovery to 1.3232 at New York midday, renewed selling interest sent price lower to a fresh 6-week low of 1.3162 in New York afternoon before stabilising.
Germany PMI services and manufacturing in February came in at 50.1 and 54.1, weaker than the forecasts of 50.5 and 55.5. Eurozone PMI services and manufacturing in February were released at 47.8 and 47.3, versus the expectations of 48.5 and 49.0.
Versus the Japanese yen, although the greenback rose briefly to 93.87 in Asian morning, active cross-buying of yen versus other currencies pressured the pair and the selloff in eur/jpy sent the pair further lower to a low of 92.79 in European session before staging a recovery to 93.31. Dollar later dropped again in New York afternoon to 92.77 after the release of much weaker-than-expected Philadelphia Fed business condition but only to climb back to 93.25 near New York closing.
Philadelphia Fed business came in at -12.5, versus the forecast of 1.0 and the previous -5.8.
In U.S. morning, the usd/jpy was pressured after the release of higher-than-expected U.S. jobless claims which rose by 20,000 to 362,000.
Despite cable’s breach of Wednesday’s low at 1.5192 to a fresh 2-1/2 year low at 1.5130 in Asia due to cross selling of sterling versus euro, the pair staged a strong recovery to 1.5272 in New York morning due to the active unwinding in eur/gbp cross before retreating to 1.5215, the pair climbed session high of 1.5274 before stbailising.
Earlier in European morning, the pound was supported due to U.K. PSNCR and PSNB, which came in at -35.61B and -9.861B, much lower than the revised readings of 1.967B and 12.416B in December.
In other news, Germany’s Finance Minister Schaeuble said ‘euro is at quite a good level; Italy made progress with reforms under Monti, “things went well” with him.’ Dallas Fed President Richard Fisher said ‘will eventually need to taper off QE, not halt it outright; support tapering off QE sooner rather that later; wud prefer to start unwinding QE this year, provided economy keep improving.’ Fed’s Williams said 'expects Fed bond buying will be needed “well into the second half” of 2013; U.S. needs ‘powerful n continuing" monetary accommodation to boost hiring, inflation too low; given shortfall in U.S. demand, crucial Fed keep doing all it can to help economy, spur hiring; recovery will be slow to cut unemployment, jobless rate to stay above 7% until at least end 2014.’ Fed’s Bullard said ‘best not to do more asset purchases than u have to, because there is uncertainty around program; FOMC has not been clear enough about what will happen when a policy threshold is crossed.’
[B]Data to be released on Friday: [/B]
Germany GDP Final, Imports, Exports, Ifo business climate, Ifo current assessment, Italy CPI final, HICP final, consumer confidence, Canada CPI, CPI core, Retail sales.