[B]Market Review - 05/02/2013[/B] [B][I] 21:03 GMT[/I][/B]
[B]Euro rises on upbeat eurozone and German data[/B]
The single currency advanced against other currencies on Tuesday as strong eurozone and German service PMI fuelled expectations that the European Central bank will keep its monetary policy steady at the meeting on Thursday.
The single currency extended Monday’s decline in Asia and hit a low of 1.3458 in European morning, the pair rose strongly to 1.3569 due to the strong eurozone and German service PMI, which came in at 48.6 and 55.7, versus the forecasts of 48.3 and 55.3. Later, despite euro’s retreat to 1.3502 in New York morning, the pair rose again to 1.3598 at New York midday due to the news that Market News International reported euro is still not strong enough to prompt monetary policy action, showing the ECB is not likely to cut at the upcoming meeting on Thursday.
Earlier in Europe, the single currency was pressured due to the weak EU retail sales, which came in at -0.8% m/m and -3.4% y/y, much weaker than the forecasts of -0.5% and -1.3%, and the revised -0.1% and -1.9% respectively
Versus the Japanese yen, although the greenback fell briefly to 91.98 in Australia, price recovered to 92.56 in Asian morning before retreating to 92.12 in European morning. However, the rally in eur/jpy pushed the pair above Monday’s high at 93.18 to a fresh 30-month high at 93.62 near New York closing.
Although the British pound traded narrowly in Asia and then dropped briefly to 1.5728 in European morning, the pair jumped to 1.5805 after the release of better-than-expected U.K. PMI service (51.5, the highest since September, versus the forecast of 49.5 and 48.5 in December), however, the active cross selling of sterling versus euro pressured the pound below last Monday’s low at 1.5674 to 1.5630 in New York afternoon.
In other news, BoJ Governor Shirakawa said to step down on March 19. France’s President Francois Hollande said ‘Europe is leaving euro currency too vulnerable to variations in one direction or other; euro currency zone needs an exchange rate policy; that strong euro zone states must act to increase domestic demand; European countries need to agree on a medium-term target for euro exchange rate.’ Germany Economic Minister Philipp Roesler said ‘objective must be to boost competitiveness, not weaken euro.’
On the data front, U.S. ISM non-manufacturing PMI came in 55.2, same as the forecast, versus the revised 55.7 in Jan.
Data to be released on Wednesday:
Australia Retail sales, U.K. BRC shop price index, Germany Factory orders, Canada Ivey PMI.(New Zealand was closed due to market holiday.)