Market Review – 08/03/2011 20:02 GMT
Euro falls on concerns over European debt woes
The euro fell on Tuesday as Moody’s cut Greek debt rating on the previous session ignited investors’ attention back to the lingering European debt woes. Yields on Portuguese and Irish debt rose to a record high. Despite the early recovery to 1.3989 in Asian midday, the single currency ratcheted lower in European session and price later declined to an intra-day low of 1.3862 in NY morning b4 recovering on short-covering together with the rally in U.S. stocks.
EU will intend to approve a ‘comprehensive’ package of measures at a March 24-25 summit in a bid to calm bond markets.
ECB policymaker Axel Weber said the European Central Bank’s signal last week that it is ready to raise interest rates was ‘quite necessary’ to tackle firming inflation pressures. He added that policymakers needed to be vigilant to the risks posed by tensions in Arab countries and rises in the oil price.
On the other news fm Bloomberg, S&P saw more sovereign ratings downgrades for euro countries.
The British pound also fell on Tuesday, earlier, cable showed muted reaction to UK data at Asian opening when UK retail sales fell 0.4% on a like-for-like y/y basis in February (January’s figure was +2.30%), a separate RICS data showed decline in UK house prices continued to ease in the 3 mths through February, after a 6-month slide. However, intra-day decline in euro dragged the British pound lower in European session and price later hit an intra-day low of 1.6125 in NY morning b4 recovering on short-covering.
The dollar strengthened against the Japanese yen and the Swiss franc on Tuesday as the slide in oil prices discouraged demand for both the yen and franc as the safe-haven assets. Usd/jpy surged from 82.21 to 82.86 whilst usd/chf rallied from 0.9262 to 0.9364.
Kuwait’s oil minister said OPEC was in talks to boost oil production.
Data to be released on Wednesday include
Australian W’pac consumer confidence, Japanese
machine orders, U.K. BRC shop price index n trade balance, Germany WPI n industrial
production, Swiss CPI, U.S. wholesale inventories, Canada New housing price index, and New Zealand Central Bank rate decision.