Market Review – 27/10/2010 22:50 GMTDollar rises broadly on reconsidered QE expectationsThe greenback strengthened against major currencies on Wednesday as investors questioned about the size of additional monetary easing by U.S. Fed and continued to reduce short bets against dollar ahead of the Federal Reserve meeting next week.
The greenback rose above Tuesday’s high of 81.66 to 81.99 against the Japanese yen in European morning after finding buying interest at 81.32 in Australia. Despite dollar’s retreat to 81.44, the greenback edged higher after the release of U.S. durable goods orders which rose by 3.3% in September versus the economists’ forecast of 2.0%. U.S. durable goods excluding defense rose by 2.9% in September versus the previous reading of -0.9% in August whilst the orders excluding transportation fell by 0.8%.
The single currency fell from 1.3878 in Asian morning on WSJ reports that the Fed would unveil a less aggressive Treasury bond purchase program in new months together with soft Australian inflation data (CPI rose 0.7% q/q in Q3, with the annual rate decelerating to 2.8% from 3.1% in Q2). Later, euro sank to 1.3734 in NY mid-day on renewed risk aversions due to the selloff in global stock markets as investors reduced short dollar-positions ahead of a Federal Reserve meeting next week.
DJI once tumbled more than 140 points and eventually ended the day at 11126, down by 43 points or 0.39%. FTSE-100, CAC-40 and DAX tanked by 1.07%, 0.96% and 0.69% respectively.
The British pound edged lower in Asia and fell below 1.5800 in tandem with euro to 1.5760 in European morning on dollar’s broad-based strength. Later, despite cable’s brief but strong rebound to 1.5866, sterling tumbled to 1.5731 in NY mid-day as investors reduced short bets against the dollar before the Federal Reserve meeting next week.
RBNZ left the official cash rate at 3.0% as expected. Nzd/usd staged a recovery from 0.7406 in NY afternoon after the selloff from 0.7501.
Economic data to be released on Thursday include:
Japan Retail sales, BOJ rate decision, U.K. Nationwide hse price, Germany Unemployment change , Unemployment rate, EU Business climate, Economic sentiment, Cons. Sentiment, U.K. CBI distribution trade, U.S. Jobless claims.
