Market Review – 04/08/2010 22:58 GMTDollar rebounds from a fresh eight-month low against yen on upbeat U.S. economic dataThe greenback rebounded strongly from an 8-month low against the Japanese yen on Wednesday, as upbeat U.S. data prompted investors to unwind short positions in dollar.
Although the greenback fell below Tuesday’s low of 85.67 against the Japanese yen in Asia to a fresh 8-month low of 85.32 on risk aversions after triggering stops at 85.50 and the pair traded narrowly in Europe, dollar rebounded strongly at NY opening after the release of better-than-expected U.S. employment and services data, which prompted investors to unwind short positions in the greenback, and the pair later hit an intra-day high of 86.39 before trading narrowly in NY afternoon.
U.S. ADP employment data in July came in at 42,000 versus the expectations of 40,000 and 13,000 in June. U.S. ISM non-manufacturing PMI in July came in at 54.3 versus the expectations of 53.0 and 53.8 in previous month.
In addition, Japanese Finance Minister Yoshihiko Noda said current moves in yen are somewhat one-sided, apparently steeping up the administration’s verbal warnings against yen’s rise.
The single currency edged lower from Asian high of 1.3240 on profit-taking together with active cross selling in euro especially versus the Japanese yen (eur/jpy tumbled from the previous session’s high of 114.14 to as low as 112.70) following Tuesday’s rally to a 3-month high of 1.3262 and fell to 1.3183 after the release of weaker-than-expected German and EU services data. Later, although euro rebounded to 1.3233 ahead of NY opening after EU retail sales data, the single currency tumbled to an intra-day low of 1.3131 due to upbeat U.S. employment and services data before recovering.
German services PMI fell to 56.5 in July versus economists’ forecast of 57.3. EU services PMI in July also came in lower-than-expected at 55.8 against the expectations of 56.0. EU retail sales in July came in at 0.0% m/m and 0.4% y/y, versus the economists’ forecast of 0.1% m/m and 0.1% y/y respectively.
The British pound edged lower from Tuesday’s near 6-month high of 1.5968 on profit-taking in Asia and then hit a low of 1.5892 after the release of much weaker-than-expected U.K. services PMI which fell to 53.1 versus the economists’ forecast of 54.4. Later, although cable managed to rebound to 1.5961 in NY opening, sterling fell again in tandem with euro and dropped to an intra-day low of 1.5857 in NY before stabilising.
Economic data to be released on Thursday include: New Zealand Unemployment rate, Unemployment change, Germany Factory orders, U.K. BOE rate decision, BOE Asset Purchase Target, BoE Monetary Policy Decision, EU ECB rate decision , ECB’s Press Conference, U.S. Jobless claims, Canada Building permits.
