Market Review – 24/06/2011 21:29 GMT
The single currency weakens broadly on Greek debt concerns
Euro fell against the greenback on Friday due to renewed concerns over the possibility of disapproval of Greek’s austerity plan when the Greek parliament is due to vote on Wednesday and Thursday, also a halt in the trading of some Italian bank share sparked fears that the eurozone peripheral debt contagion may spread pressured euro to as low as 1.4142 in New York afternoon before recovering.
Earlier in the day, although the single currency rebounded in European morning and jumped to a session high of 1.4306 after the release of better-than-expected German Ifo data (Germany Ifo business climate and current assessment index came in at 114.5 and 123.3 versus economists’ forecast of 113.5 and 121.0 respectively), however, active cross-selling in euro pressured price there and the pair later fell on comments from European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo who warned that the euro zone’s debt crisis is far from over, euro dropped to a session low of 1.4142 in New York afternoon trading before stabilising.
In euro crosses, the single currency weakened against the Japanese yen, pound and Swiss franc with eur/jpy, eur/gbp and eur/chf falling from session highs of 114.89, 0.8926 and 1.1963 to as low as 113.78, 0.8861 and a fresh lifetime low of 1.1809 respectively.
Sterling ended lower against the greenback on Friday on speculation that the Bank of England would not raise rate this year after recent weak U.K. economic data. The pound tracked euro’s intra-day movement closely. Although cable rebounded from intra-day low of 1.5952 to a session high of 1.6046 in European morning before ratcheting lower to 1.5963 on concerns over Greek debt crisis, price traded around 1.5965 near New York closing.
Versus the Japanese yen, US dollar dropped sharply from intra-day high of 80.60 to 80.14 in European morning on broad-based weakness of the greenback but later gyrated inside aforesaid range as market’s focus was on the euro and other currencies.
In other news, European Union leaders appointed Italy’s Mario Draghi who will replace France’s Jean-Claude Trichet, Present ECB chief will step down at the end of October, as the next president of the European Central Bank on Friday from 1 November 2011 to 31 October 2019.
On the data front, U.S. final Q1 GDP rose by 1.9% versus previous reading of 1.8%. U.S. final Q1 GDP deflator increased by 2% against economists’ forecast of 1.9% and previous reading of 1.9%. U.S. Q1 PCE price index rose by 3.9% versus the consensus forecast of 3.8%. U.S. durable goods rose by 1.9%, higher than economists’ forecast of 1.5%, versus the upwardly revised reading of -2.7% (previous -3.6%).
Data to be released next week include:
New Zealand exports, imports and trade balance; China leading index; U.K. nationwide house price; Germany import price index and retail sales; U.S. personal spending, personal income, PCE index and midwest manufacturing on Monday.
Japan retail sales; Germany CPI and HICP preliminary and Gfk consumer confidence; U.K. current account and GDP; U.S. SnP/CS home price, consumer confidence and Richmond Fed manufacturing on Tuesday.
Japan industrial production; U.K. mortgage approval; Eurozone business climate, economic, industrial and consumer sentiment; Swiss KOF indicator; Canada CPI; U.S. pending home sales on Wednesday.
U.K. GFK survey; Japan manufacturing PMI, construction orders and housing starts; Germany unemployment rate and unemployment change; Eurozone HICP flash; Canada GDP; U.S. jobless claims and Chicago PMI on Thursday.
Japanese household spending, national and Tokyo CPI, unemployment rate and Tankan big manufacturing; Swiss PMI; Germany manufacturing PMI; Eurozone manufacturing PMI and unemployment rate; U.K. manufacturing PMI; U.S. University Michigan survey, construction spending and ISM manufacturing on Friday. Canada will be closed on Friday.