[B] Market Review - 20/03/2013[/B] [I][B]21:36GMT[/B][/I]
[B]Euro offs session high after Fed statement[/B]
The single currency eased from session high on Wednesday after the Fed kept its monetary policy unchanged at the end of its FOMC meeting. Fed kept Federal funds 0-0.25%, reaffirmed its bond buying program and remained the pace of asset purchases steady at US$ 85 billion per month as widely expected.
Federal Reserve announced in its latest statement that the economy is growing at a moderate pace, but it still sees downside risks. Labor market conditions have shown signs of improvement in recent months but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy has become somewhat more restrictive.
In early trade, euro rebounded from 1.2858 in Australian morning, off from its near 4-month low at 1.2844. The single currency continued to edge higher in Asia and intra-day rise gathered momentum in Europe, price later climbed to session high of 1.2979 ahead of the Fed Chairman Ben Bernanke’s conference in New York afternoon.
Euro retreated to 1.2930 on profit-taking and last seen around 1.2935 near New York close.
In other European currency, the British pound fluctuated widely versus the dollar, despite a sharp rebound from 1.5026 to 1.5158 after BOE released its MPC minutes, the pair then tanked to as low as 1.5042 after U.K. Chancellor Osborne presented his 2013 Budget to U.K. parliament. Later, cable rallied in tandem with euro and climbed to session high of 1.5187 in early New York early trading but only to retreat to 1.5097 near U.S. closing.
BoE released minutes of its March 6-7 MPC meeting, which showed ‘MPC voted 6-3 to keep QE total at 375 billion sterling in March; King, Fisher n Miles voted for 400 billion sterling; recent data has not altered economic outlook materially, but inflation outlook a little higher; probable growth will pick up over 2013, inflation likely to exceed 2% for much of next 3 years; right to accommodate first-round impact of weaker sterling on CPI if weakness reflects real factors; sterling weakness due to any perception of excessively loose policy or weaker anti-inflation commitment would be different; some MPC members argued further QE cud lead to unwarranted depreciation of sterling; inflation expectations contained but MPC will continue to watch them closely.’
Versus the Japanese yen, dollar rebounded in Asia after holding above previous session low of 94.72, price edged higher in the Asian and European sessions and climbed to a high of 96.13 in New York afternoon on active cross-selling of yen vs other currencies.
On the data front, German Feb PPI came in at -0.1% m/m and 1.2% y/y compared to market forecasts of 0.2% and 1.5% respectively.
[B]Data to be released on Thursday : [/B]
New Zealand GDP, Japan Trade balance, Export, Import, All industry index, China HSBC Services PMI, Swiss Trade balance, France Manufacturing PMI, services PMI, Germany Manufacturing PMI, Services PMI, EU Manufacturing PMI, Services PMI, U.K. Retail sales, PSNCR, Public sector net borrowing, CBI industrial trend, U.S. Jobless claims, Markit PMI preliminary, House price index, Philadelphia Fed survey, Existing home sales, Leading indicators, Canada Retail sales on Thursday.