Market Review – 09/12/2010 21:33 GMT
Euro falls on lingering Irish debt worries
The single currency fell on Thursday as Fitch downgraded Ireland’s sovereign debt rating and Irish opposition party said it would vote against an emergency European Union bailout.
Although euro rose to 1.3323 initially in Asian afternoon as early release of stronger-than-expected Australian jobs data boosted risk appetite, the single currency pared all of its gain and fell sharply from said high on Irish debt worries. The pair eventually tumbled to 1.3164 in NY mid-day before staging a strong rebound in late NY session due to dollar’s weakness.
Euro was pressured due to renewed European debt worries after a spokesman of Ireland’s centre-left opposition Labour party said the party would vote against an 85 billion euros IMF/EU bailout package when it is put before parliament for approval next week. In addition, Fitch downgraded Ireland’s long-term foreign and local currency Issuer Default Ratings (IDRs) to BBB+ (3 notches above junk) from A+ and indicated the outlook on the long-term IDRs were stable.
The greenback fell from 84.12 to 83.65 against the Japanese yen in Asia before staging a minor recovery, however, the greenback dropped again and reached 83.51 in NY session. The greenback was pressured as U.S. Treasuries prices rose and yields fell after a well-bid 30-year Treasury bond auction.
The British pound initially rose to 1.5842 but cable swiftly retreated from there and fell sharply to 1.5735. Despite staging a strong rebound, the pair nose-dived to 1.5711 before staging a strong rebound. Earlier, the Bank of England kept interest rates unchanged at 0.5% as expected and maintained 200 billion pounds of total asset purchases that have been in place since February.
On economic front, Australia’s employment change in November came in at +54.6K versus the forecast of 20.0K. U.K. trade balance was -8.529 billion pounds in October versus the economists’ forecast of -8.05 billion pounds and previous reading of -8.392 billion pounds in September. Halifax house price index dropped by 0.1% m/m and 0.7% 3mths/year. US jobless claim came in at 421.0K versus the forecast of 425.0K and the previous reading of 438.0K.
The economic indicators to be released on Friday include:
Japan Domestic CGPI, U.K. PPI, US. Trade Balance, Export and Import data, The University of Michigan Consumer Confidence Survey and Fed Budget, Canada Trade Balance.