Market Review – 18/10/2010 23:01 GMTDollar strengthens against euro after Geithner’s comments
The greenback rose against euro in late NY trading session on Monday, as U.S. Treasury Secretary Timothy Geithner said U.S. would not engage in devaluing the greenback.
Although the single currency fell from 1.4006 in NZ and tumbled below Friday’s low of 1.3937 to 1.3830 in European morning, active buying by U.S. banks and funds prompted short-covering and euro staged a strong rebound from there to 1.3999 in NY afternoon. Active cross-buying in euro versus yen and sterling gave support to euro as eur/jpy and eur/gbp rallied from 112.40 to 113.70 and 0.8706 to 0.8795 respectively. However, euro retreated sharply from there and closed the day at 1.3934 after U.S. Treasury’s Geithner’s comments in late NY trading session.
U.S. Treasury Secretary Timothy Geithner said ‘ no country can devalue its way to prosperity, to be competitive’ and said ‘U.S. will not engage in dollar devaluation.’ He added that U.S. would work hard to keep confidence in dollar.
Although the greenback rose briefly but strongly from 80.97 to 81.50 against the Japanese yen in NZ, dollar retreated from there on risk aversion and dropped to 81.13 in Asian mid-day. The pair then rebounded from there and spent the rest of the day within the aforesaid range.
The British pound fell from 1.6004 and tumbled to 1.5837 in tandem with euro in European morning on a double whammy of announcement of the coalition government’s huge spending cuts on 20 October together with Sunday’s report by the Centre for Economics and Business Research that BOE would expand its bond-purchase stimulus program by 100 billion pounds, however, buying interest there lifted cable up and sterling recovered to 1.5943 in NY afternoon. Later, the pair retreated sharply due to U.S. Treasury’s Geithner’s comments.
Economic data to be released on Tuesday include:
EU Current account (euro), Germany ZEW index, U.K. CBI Trends total orders, U.S. Building permits, Housing starts, Canada BOC rate decision.