[B]Market Review[/B] - 01/02/2013 19:30
[B]Euro rises to a fresh 14-month high on U.S. jobs data[/B]
The single currency strengthened to a fresh 14-month high against dollar on Friday as the slightly weak U.S. jobs data reaffirmed market expectations that the Federal Reserve will keep its easy monetary policy. The strong manufacturing data boosted investors’ confidence that U.S. economy is rising from the bottom.
The single currency traded narrowly in Asia and then rose to 1.3675 in European morning after the release of better-than-expected eurozone manufacturing PMI (47.9 versus street forecast of 47.5). Later, despite euro’s brief but sharp retreat to 1.3586 in New York morning after the U.S. jobs data, the pair rose above said 1.3675 high to a fresh 14-month peak of 1.3711 at U.S. midday on improved risk appetite due to strong U.S. manufacturing data. U.S. ISM manufacturing came in at 53.1, better than the forecast of 51.0. However, price retreated to 1.3658 in New York afternoon on profit-taking.
The single currency was also supported by the strong U.S. Reuters/Michigan consumer confidence and construction spending, which were at 73.8 and 0.9%, much better than the expectations of 71.5 and 0.6%
Despite cable’s marginal gain above Thursday’s high at 1.5876 to near 1-week high of 1.5878 in European morning due to intra-day rally in euro, the pound fell sharply to 1.5808 after the release of weak U.K. manufacturing PMI, which came in at 50.8 versus the expectation of 51.0 and the revised 51.2 in December, but then staged a minor recovery to 1.5847 in New York morning. However, the rally in eur/gbp pressured the pair to a low of 1.5688 near New York close.
Versus the Japanese yen, the greenback rose initially to 92.29 at European open due to broad-based selling of yen but then briefly fell to 91.79 in New York morning due partly to the weak U.S. jobs data as non-farm payrolls and umemployment rate came in at 157K and 7.9%, versus the forecasts of the revised 196K and 7.8% respectively. However, active cross selling of yen versus euro pushed the pair above said 92.29 high to a fresh 2-1/2 year top at 92.97 in late New York trade.
In other news, New York Federal Reserve Bank president William Dudley said ‘international economic situation is better than 6-month ago; European crisis has diminished; sees improvement in China growth; positive moves by Japan’s new government; things gradually improving globally, could be positive for U.S. economy.’ Fed’s Bullard said ‘January jobless report positive; projects unemployment to continue to tick down through 2013; committee continues to discuss all its policy program, including QE program and how to handle it going forward; can slow down purchases as economy continues to improve; Fed committee still not agreed on how best to describe ending bond buying, it will be collective judgement on when there will be substantial improvement in labor market.’
[B]Data to be released next week:[/B]
Australia Building Approvals, U.K. Lloyds business barometer, PMI construction, EU Sentix investor confi., PPI, U.S. Durable goods (rev.), ex. Defense (rev.), ex. Transport (rev.), Factory orders on Monday.
Australia Trade balance, House price index, RBA rate decision, Swiss Trade balance, Italy services PMI, France services PMI, Germany PMI service, EU PMI service, Retail sales, U.K. BRC retail sales, PMI service, U.S. ISM non-manufacturing on Tuesday.
Australia Retail sales, Germany Factory orders, Canada Ivey PMI on Wednesday. (New Zealand was closed due to market holiday.)
New Zealand Unemployment rate, New Zealand Employment change, Japan Machinery orders, Australia NAB business confidence, Employment change, Unemployment rate, Japan Leading indicators, France trade balance, U.K. Industrial prod’n, Manufacturing prod’n, Trade balance, BOE rate decision, BOE QE total, Germany Industrial prod’n, ECB rate decision, U.S. Jobless claims, Canada New housing price index, Building permits on Thursday.
Japan Current account, Economic watch DI, China Consumer Price Index, Producer Price Index, Imports, Exports, Trade Balance, Swiss Unemployment rate, Retail sales, Germany Trade balance, Import, Export, Italy industrial production, U.S. Trade balance (usd), Wholesale inventories, Canada Housing starts, Unemployment rate, Net change in employment on Friday.