Market Review – 13/10/2010 23:07 GMTDollar hovers near 15-year low against yen on speculation of Fed easingThe greenback hovered near 15-year low against the Japanese yen on Wednesday, as FOMC minutes released on Tuesday fueled speculation of further monetary easing in U.S., boosting investors’ demand for high-yield assets. The Australian dollar climbed to the highest level against dollar since it began to float freely in 1983.
The greenback bounced to 82.01 against the Japanese yen in Asian morning due to market’s fear of possible BOJ’s intervention after price weakened to 81.66 in Australia. Dollar then moved sideways in European and NY sessions as market’s focus was on other major currencies. Earlier in Asia, Japanese Finance Minister Noda spoke to the lawmakers in parliament that ‘he could not answer whether or not the government will conduct currency intervention as the yen hovers near a 15-year high versus the dollar.’
Although the single currency continued to rise from 1.3912 in Asia on Wednesday following the release of dovish FOMC minutes on Tuesday and climbed to an intra-day high of 1.4002, euro retreated from there after being knocked down by heavy offers from U.S. names plus other accounts and fell sharply to 1.3912 in NY morning before staging a strong rebound.
Although the British pound edged higher from 1.5775 and rose to 1.5888 in European morning, sterling then retreated from there and the release of mixed U.K. Jobs data (jobless claims jumped to 5.3K in September whilst unemployment fell to its lowest in more than a year to 7.7%) caused cable to ratchet lower to 1.5805 on long liquidation. Cable then rebounded and climbed to 1.5909 in NY afternoon after BOE’s Monetary Policy Committee Member Andrew Sentance said British interest rates needed to start rising gradually to counter the risk of above-target inflation.
The commodity currencies rose strongly on Wednesday, as the Australian dollar climbed to 0.9937 against the greenback, which is the highest level since aussie was allowed to float freely in 1983. Nzd/usd surged from 0.7548 to 0.7633 while usd/cad tanked from 1.0106 to 1.0011. Spot gold rallied to a fresh record high of 1373.60 an ounce while spot silver rose to a fresh 30-year high of 23.83 an ounce.
Economic data to be released on Thursday include:
New Zealand Retail sales, Japan Domestic CGPI , Machine tools orders, U.S. Trade balance (usd), Jobless claims , PPI, PPI core, Canada Exports, Imports , Trade balance (cad) .
