Market Review – 13/08/2011 00:32 GMT
Euro rises on renewed risk appetite due to U.S. retail sales data
The single currency strengthened Friday as better-than-expected U.S. retail data brought back investor’s risk appetite but price retreated after the release of a dismal U.S. consumer sentiment report. Euro and sterling were supported by rebound in U.S. and European stock markets.
The single currency ratcheted lower in Asia on broad-based selling of euro and tanked briefly to a low of 1.4150 due to renewed weakness in European stocks in early European morning before staging a rally to 1.4292 in NY morning on active cross buying of eur/chf (up from 1.0688 to 1.1092) and better-than-expected U.S. retail sales data. Euro later retreated to 1.4210 in part due to very weak U.S. consumer sentiment data before stabilising.
U.S. retail sales M/M July and retail sales excluding auto M/M came out at 0.5% and 0.5% vs forecasts of 0.5% and 0.2% respectively. The University of Michigan consumer sentiment survey was far weaker-than-expected at 54.9 vs forecast of 63.0, its lowest level since 1980.
The single currency was supported by the sharp rise in U.S. and European stock markets. The FTSE 100, CAC40, and DAX gained 3.04%, 4.02%, and 3.45%, respectively. The DJI closed up 1.13% or 125.71 points at 11269.02.
Versus the Japanese yen, the greenback extended Thursday’s rise to its intra-day high of 77.01 in Asian morning. However, dollar then ratcheted lower to 76.52 on dollar’s broad-based weakness in NY morning but the pair rebounded to 76.90 on short-covering together with better-than-expected U.S. retail sales data in NY afternoon before retreating again.
The British pound edged lower in tandem with euro in Asia and then fell briefly to an intra-day low of 1.6168. However, sterling rebounded strongly to 1.6313 in NY morning as equity markets made large gains before trading sideways.
Data to be released next week include:
U.K. rightmove hse prices, Japan Q2 GDP, annualised Q2 GDP, GDP deflator Q2, Swiss PPI, U.S. empire state manufacturing, Net LT TIC, NAHB housing mkt index on Monday;
Australia RBA minutes, Germany GDP, U.K. CPI, RPI, EU GDP, trade balance, U.S. building permits, housing starts, export price index, import price index, capacity utilisation, industrial production on Tuesday;
New Zealand PPI input, PPI output, EU current account, U.K. MPC vote, ILO unemployment,avg. earnings, EU HICP final, U.S. PPI, PPI core on Wednesday;
Japan tankan manufacturing, trade balance, export Y/Y, import Y/Y, U.K. retail sales, U.S. CPI, CPI core, real earnings, jobless claims, existing home sales, leading indicators, Philadelphia Fed survey, Canada leading indicators, wholesale sales on Thursday;
Germany PPI, U.K. PSNCR, PS net borrowing, Canada CPI, CPI core on Friday.