[B]Market Review - 12/02/2013 [I]19:06GMT[/I]
Yen rises strongly after G7 official expresses concern over yen move[/B]
The Japanese yen jumped against dollar and euro on Tuesday as the G7 official said the early statement showed worries about the excessive move in Japanese yen.
Versus the Japanese yen, although the greenback traded narrowly below Monday’s high at 94.46 in Asia and dropped briefly to 93.87 on cross buying of yen versus other currencies, price edged higher to 94.41 in Europe as the statement from G7 reaffirmed commitment to market determined exchange rate and said it would not target exchange rates and excessive fx moves can have adverse effects. However, the pair nose-dived to a low of 92.95 in New York morning due to the comments from G7 official but then recovered to 93.62 in U.S. afternoon.
The G7 official said ‘G7 statement was misinterpreted, statement signaled concern about excess moves in Japanese yen; G7 is concerned about unilateral guidance on the yen, Japan will be in spotlight at G20 meeting in Moscow.’
Although the single currency edged lower from Australian high at 1.3412 to 1.3364 in European morning due to cross selling of euro versus other currencies, the strong rise in eur/chf pushed the pair above Monday’s high at 1.3428 to 1.3467 before retreating to 1.3410 in New York morning. However, the comments from ECB’s Draghi lifted euro further higher to 1.3475 before stabilising in U.S. afternoon.
The European Central Bank President Mario Draghi said ‘ECB awares exchange rate are as important for growth as for price stability; some comments on monetary policy are inappropriate, fruitless; ECB mandate is price stability in the medium term; no such thing as a currency war; can only consider employing OMT bond-buy plan if there are major problems in transmission of monetary policy.’
Despite trading narrowly in Asia, the British pound fell sharply to a fresh near 6-month low at 1.5572 in European morning due to active cross-selling of sterling versus euro. However, cable pared intra-day losses and rose to session high at 1.5671 in New York afternoon.
In other news, German Finance Minister Schaeuble said ’ there is not foreign exchange problem in Europe, there is concern about a problem elsewhere; hope all countries will stick to G7 statement on foreign exchange; eurozone bailout funds for bank recapitalisation should be capped at 80 billion euros.’ Japan MOF official said ‘markets should basically determine exchange rates; will continue to pay close attention to fx moves; no comment on forex level; Japan to conduct appropriate monetary, fiscal policies n growth strategy to support own economy.’ SNB President Jordan said ‘the Swiss cap franc remains key policy; will keep Swiss franc cap policy in place without restriction, ready to take additional measures; there is no currency war, central banks can legitimately use policy for domestic reasons.’
[B]Data to be released on Wednesday: [/B]
Australia W’pac consumer confi., Japan Domestic CGPI, Tertiary industry index, Germany WPI, EU Industrial prod’n, U.S. Import price index, Retail sales, Retail sales less auto, Business inventories on Wednesday. (China is closed due to market holiday.)