Market Review – 17/03/2011 20:30 GMT
U.S. dollar rebounds strongly against the Japanese yen from a fresh record low ahead of G7 conference call
The dollar rebounded strongly from a post-World War II low against the Japanese yen on Thursday ahead of the upcoming G7 Finance ministers’ teleconference call.
Earlier, despite the greenback’s initial free fall to a fresh record low of 76.25 against the Japanese yen in thin and chaotic trading in Australian morning, rhetorics by Japanese officials and confirmation of a G7 Finance ministers’ teleconference later today prompted short-covering, the pair literally pared all its intra-day losses and price climbed back to 79.74 in Asian morning. Although the dollar ratcheted lower to 78.25/27 in European midday, price later staged another moderate rebound in NY session.
Finance ministers of the Group of seven industrialised nations will hold a conference call at 22:00GMT later. A G7 source told reporter that the officials are not expected to agree firm policy action but will offer solidarity to Japan and review its plight.
The Bank of Japan pumped another five trillion yen into the money markets on Thursday and the central bank has injected a total of 33 trillion yen into the financial institutions since Monday.
The single currency rose to a fresh four-month high on Thursday partly due to solid demand at Spanish 4.1 bln euro debt sale. Despite euro’s cross-inspired strong retreat from 1.3969 in Australia (eur/jpy nose-dived from 110.63 to 106.50 in just one hour), buying interest at 1.3869 limited euro’s downside and price then rallied to a fresh four-month high of 1.4053 in European morning before a brief retreat due to the slightly higher-than-expected U.S. inflation data (U.S. Feb. CPI rose by 0.5% m/m n 2.1% y/y versus economists’ forecast of 0.4% m/m n 2.0% y/y respectively).
The British pound tracked intra-day movement of euro on Thursday. Despite the early brief drop to 1.5982 in Australian morning, cable also rallied to an intra-day high of 1.6171 in tandem with euro in European midday before trading sideways in NY trading.
Data will be released on Friday:
Japan BOJ minutes, Germany PPI, Swiss combined PPI, U.K. Nationwide consumer confidence, Eurozone current account and trade balance, Canada CPI.