Acetrader-Daily Market Outlook 28-12-2010
Market Review - 27/12/2010 21:42 GMT
Euro rebounds against dollar after China's rate hike
The single currency initially fell against dollar on Monday after weekend's quarter-point rate hike by PBOC in its key one-year lending and deposit rates on X'mas Day (its 2nd rise since mid-Oct) prompted traders to buy dollar and yen on risk aversion. Euro dropped to 1.3072 after the surprise rate hike but the single currency swiftly rebounded from said low as traders brushed aside the concerns about the rate hike and pushed the euro higher. The single currency later climbed to 1.3171 before stabilizing.
The dollar fell to a three-week low against the yen as China raised interest rate to contain inflation. The dollar was also pressured after an auction of $35 billion auction in 2-year US Treasury notes was met with strong demand. The greenback briefly rose to 82.98 against the Japanese yen in Asian morning, however, the pair fell to 82.65 and then spent the rest of the day inside the aforesaid range.
The British pound fell in tandem with euro initially and reached 1.5400 due to a drop in U.K. Hometrack Housing Survey which showed U.K. house asking prices fell 0.4% on the month in Dec and were down 1.6% on the year. Sterling then rebounded on short-covering and price climbed back to 1.5456 but cable dropped sharply to 1.5370 in part due to active cross-selling in sterling as eur/gbp jumped to 0.8558 from 0.8485.
Tuesday will be holidays in New Zealand, Australia, U.K. and Canada.
Economic indicators to be released on Tuesday include:
Japan Household spending, National CPI Y/Y, National CPI (core) Y/Y, Tokyo CPI Y/Y, Unemployment rate, U.S. Consumer confidence and Richmond Fed Manuf.
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Dollar rebounds from a fresh eight-month low against yen on upbeat U.S. economic data
The single currency continued its descent this week and tumbled sharply to a 10 year-low against the yen and to a 6-month low against the greenback on speculation over the possibility of a Greece default and the resignation of European Central Bank executive board member and also its chief economist Jurgen Stark.
The single currency briefly rallied in European morning on Wednesday after German Constitutional Court rejected lawsuits aimed at blocking the country's participation in eurozone bailouts, easing worries about eurozone debt crisis.
Increasing worries about the Christian Democratic union's most beleaguered states sent the euro lower against the dollar on Monday for the fifth day straight to its lowest level since August 5.
Although dollar weakened broadly after release of worse-than-expected U.S. non-farm payrolls report as the gloomy data fuelled expectations of possible quantitative easing by the Federal Reserve at its next FOMC meeting later this month. The selloff in U.S. stocks triggered renewed risk-aversion activities and led to short-covering purchase of the greenback across the board in New York afternoon.
The Swiss franc rose against all its major counterparts on Wednesday as the Swiss National Bank has not recently signalled further intervention. Although the franc retreated as Swiss Economy Minister Johann Schneider-Ammann said it was still massively overvalued, the pair remained supportive as he also said Switzerland would have to keep living with the strong franc for some time.
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Forex quotes show the price of one currency evaluated in the price of the other one. The other name of the Forex quote is a currency rate at Forex market. It should also be noted that the quote is the measure for the value of other assets, such as goods and securities – bonds and stocks. Demand and supply make a strong impact on quotes formation.
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The single currency continued its descent this week and tumbled sharply to a 10 year-low against the yen and to a 6-month low against the greenback on speculation over the possibility of a Greece default and the resignation of European Central Bank executive board member and also its chief economist Jurgen Stark.
The single currency continued its recent steep descent and tumbled on Thursday against all major currencies as ECB President Jean-Claude Trichet, whose 8-year term will end on October 31, said in ECB's monetary policy press conference that there is 'intensified downside risks' in European economy and inflation has remained elevated. Later in NY afternoon, euro extended its intra-day decline after Fed Chairman Ben Bernanke did not provide details of any new stimulus measures, however, he said 'Fe
The single currency briefly rallied in European morning on Wednesday after German Constitutional Court rejected lawsuits aimed at blocking the country's participation in eurozone bailouts, easing worries about eurozone debt crisis.
Increasing worries about the Christian Democratic union's most beleaguered states sent the euro lower against the dollar on Monday for the fifth day straight to its lowest level since August 5.
Although dollar weakened broadly after release of worse-than-expected U.S. non-farm payrolls report as the gloomy data fuelled expectations of possible quantitative easing by the Federal Reserve at its next FOMC meeting later this month. The selloff in U.S. stocks triggered renewed risk-aversion activities and led to short-covering purchase of the greenback across the board in New York afternoon.
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