Market Review – 22/12/2010 21:21 GMT
Euro falls to record low against Swiss franc on European debt worries
Euro initially rose to 1.3183 in European morning on Wednesday after Reuters quoted the Jornal de Negocios daily newspaper that China would be ready to buy 4-5 billion euros of Portuguese sovereign debt,
however, the single currency retreated from there and later tumbled to 1.3078 in NY afternoon as traders continued to seek safety from the eurozone’s sovereign debt crisis and sold the euro for the Swiss franc. Eur/chf slumped to a fresh record low of 1.2440 while eur/jpy tumbled from 110.13 to 109.20
The greenback briefly rose to 83.86 against the Japanese yen in Asian morning but the pair then retreated and eventually reached 83.41.
On economic front, U.S. Q3 final GDP came in at 2.6% versus the economists’ forecast of 2.8%. U.S. final Q3 GDP deflator was 2.0% against the expectation of 2.3% whilst core PCE rose by 0.5%, the smallest rise since records began in 1959. U.S. Nov. existing home sales rose by 5.6% to 4.68 million unit annual rate (In a Reuters survey the forecast was +5.0% and 4.71 million).
The British pound initially edged higher to 1.5493 but cable then fell sharply and eventually reached 1.5356 in NY session. Earlier, pound was pressured as U.K. final Q3 GDP revised down unexpectedly at +0.7% q/q and 2.7% y/y versus the economists’ forecast of 0.8% q/q and 2.8% y/y.
In other news, the Bank of England’s Monetary Policy Committee retained its three-way split at December’s policy meeting as shown on the minutes. A growing number policy makers were worried about rising medium-term inflation risks. Adam Posen called for an extra 50 billion pounds more quantitative easing and Andrew Sentance urged interest rates to rise to 0.75% from 0.50%.
Economic indicators to be released on Thursday include:
New Zealand GDP, US personal income, PCE index, durable goods, jobless claims and new home sales , Japanese market will be closed for holiday.