[B]Market Review - 21/03/2013[/B] [I][B]21:50GMT[/B][/I]
[B]Euro falls versus usd and yen on weak data and Cyprus concerns[/B]
The single currency fell broadly on Thursday as weak eurozone and Germany PMIs and increasing concerns over Cyprus continued to weigh on the euro.
Despite a brief rebound to session high at 1.2955 in Asian morning, euro came under renewed selling pressure and retreated as concerns over Cyprus continued to weigh. Intra-day decline accelerated in European morning and price tumbled to an intra-day low at 1.2879 after the release of much weaker-than-expected Germany and Eurozone manufacturing and services PMI.
Later, the single currency staged a brief rebound to 1.2932 at New York open due to short-covering before falling again to 1.2883. However, news that euro zone Finance Ministers would hold a teleconference later in the day gave the single currency a lift and euro rebounded to 1.2943 before retreating below 1.2900 again.
Euro zone manufacturing and services PMI came in at 46.6 and 46.5 vs forecasts of 47.9 and 48.0 respectively. German manufacturing and services PMI were reported at 48.9 and 51.6, compared to expectations of 50.3 and 54.7 respectively.
The British pound fluctuated wildly on Thursday, price extending previous day’s decline to intra-day low of 1.5090 in Ausralia before rebounding to 1.5129 in early Asian morning. Cable jumped in European morning after U.K. retail sales beat forecasts and eventually climbed to a fresh 3-week high at 1.5210. Later, price pared intra-day gains and retreated to 1.5126 in New York morning before stabilsing.
U.K. retail sales m/m and y/y were reported at 2.1% and 2.6%, much higher than forecasts of 0.6% and 1.2% respectively.
Versus the Japanese yen, the greenback came under heavy selling pressure and fell to 95.21 in European morning. Despite a brief but sharp recovery to 95.67 after new BoJ Governor Haruhiko Kuroda said at press conference that further bold easing measures were needed to beat deflation, price resumed intra-day decline and tumbled to session low at 94.56 in New York afternoon.
In his inaugural press conference with 2 other deputy governors, BoJ’s governor Kuroda said ‘no comment if to call emergency police-setting meeting; BoJ must expand monetary stimulus both in terms of volume of assets it buys n type of assets it targets; will strive to achieve BoJ’s 2% inflation target in 2 years; further bold easing is needed to achieve 2% inflation target; ready to take all means available until 2% target achieved; must buy LT assets to push down yields across the curve; QE is essential but expanding base money alone is not enough.’
In other news, Italy centre-left leader Bersani said ‘hopes he can contribute to solution of forming a gov’t; has proposed reform programme to President, trusts his judgement to find solution.’ A senior eurozone official said ‘Cyprus will have to wind down biggest banks, wipe out their depositors unless it agrees to come form of bank levy quickly; collapse of financial sectory in Cyprus cud force it out of the eurozone; Cyproit bank resolution cud entail at least 30-40% loss on uninsured deposits; Cyrpus shud apply 12-13% one-off levy on large deposits, nationalise pension funds to generate money for bailout deal.’
On the data front, U.S. jobless claims rose to 336K from 334K previously. UK CBI industrial trends came in at 15, up from -14 previously.
[B]Data to be released on Friday :[/B]
Australia conference board leading index, China sentiment indicator, France business climate, Germany Ifo business climate and Ifo current assessment.