[B]Market Review[/B] - 04/02/2013 19:08 GMT
[B]Euro tumbles on Monday amid political turmoil[/B]
The single currency tumbled against dollar and yen on Monday amid politicial turmoil as Spanish Prime Minister Mariano Rajoy faced calls to resign over a corruption scandal.
Although the single currency rose briefly to 1.3660 in Australia, renewed selling interest pressured the pair to 1.3619 in Asia. Later, active cross selling of euro versus sterling and Swiss franc in Europe sent price furthrer lower, euro fell to 1.3549 and then 1.3505 in New York afternoon due to the selloff in U.S. and European equities. DJI index tumbled by more than 100 points while FTSE-100, CAC-40 and DAX were down by 1.58%, 3.01% and 2.49% respectively.
Earlier in European morning, the single currency was pressured on the strong rise in Spanish bond yield due to the newspaper report that Spain’s Prime Minister Mariano Rajoy was facing calls to resign after newspaper reports alleged he accepted illegal cash payments. The weak Spainish jobless rate and eurozone Sentix investor confidence, which was up by 2.7% m/m and -3.9%, also weighed on the single currency.
Versus the Japanese yen, the greenback fell briefly from Friday’s high at 92.97 to 92.50 in Asian morning, however, renewed buying interest pushed the pair above said 92.97 to a fresh 2-1/2 year high at 93.18 in European session before falling sharply to 92.30 in New York afternoon on profit-taking together with active cross buying of yen versus other currencies.
Although the British pound briefly fell 5 ticks below Friday’s 1.5688 low to 1.5683 in Australia, the pair traded narrowly above said level in Asia and edged higher to 1.5740 in European morning due to active cross unwinding of sterling versus euro but then retreated to 1.5708. Later, the selloff in eur/gbp pushed cable above said 1.5740 to 1.5772 in New York afternoon.
In other news, Japan Finance Minister Taro Aso told public broadcaster NHK on Sunday that it was not Tokyo’s goal to weaken the yen and its policies were purely aimed at beating deflation, brushing off foreign concerns about currency wars ahead of a G20 meeting in Moscow. Germany’s Chancellor Merkel said ‘has great respect for Spanish reforms; convinced Spain’s reforms will bear fruit; Germany, Spain agree common economic policy needed.’
Data to be released on Tuesday:
Australia Trade balance, House price index, RBA rate decision, China HSBC services PMI, Swiss Trade balance, Italy services PMI, CPI, HICP, France services PMI, Germany PMI service, EU PMI service, Retail sales, U.K. BRC retail sales, PMI service, U.S. ISM non-manufacturing.