Acetrader-Daily Market Outlook 30-12-2010
Market Review - 29/12/2010 21:37 GMT
Dollar falls as strong Treasury demand hits bond yields
The dollar fell to a 7-week low against the Japanese yen after the auction of 7-year Treasury notes was met with strong demand. The solid debt auction provided support to the price of Treasury securities and sent the yields lower, diminishing the appeal of the greenback.
The $29 billion auction of 7-year notes was met with strong demand as indirect bidders, which typically include buying by foreign central banks, took 64.2% of the debt, the highest since June 2009.
The greenback remained under pressure against the Japanese yen throughout Wednesday. The pair fell from 82.45 and penetrated Tuesday's low of 81.81 to as low as 81.61 in late NY trade before stabilizing.
The single currency extended Tuesday's selloff from 1.3275 to 1.3083 at Asian opening before rebounding on short-covering and on talk of possible buying from Asian central banks. Euro ratcheted higher at NY opening after German preliminary Dec CPI M/M rose by 1.0% (forecast was +0.1%), being the highest monthly increase since Dec 2004 whilst Y/Y index rose by 1.9% (forecast was +1.6%) and was the highest since Oct 2008. Euro later rallied to 1.3240 in NY session on dollar's broad-based weakness.
The British pound initially dipped to 1.5352 but cable managed to rebound from there. Price later rose sharply and rallied to 1.5518 in NY trade on dollar's broad-based weakness.
Economic indicators to be released on Thursday include:
US jobs data, Chicago PMI and pending home sales.
Market Moving News on USD/JPY - 81.70.. Dollar falls to 7-week low versus the Japanese yen as US Treasury bond yields declined following a solid auction of 7-year Treasury notes. The dollar weakened to 81.62 against the yen while euro climbed to 1.3224 on dollar's broad-based weakness.
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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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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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