Market Review – 20/08/2011 03:25 GMT
Yen surges to a fresh all-time high against dollar before recovering
The Japanese yen briefly rallied to a new record high versus the dollar on Friday on comments from the Japanese Vice Finance Minister who said in an interview with the Wall Street Journal that the Bank of Japan does not plan to intervene often.
Versus the Japanese yen, the greenback jumped to 77.00 in Asian morning on a commercial order before falling to 76.32 in European morning. Later, despite dollar’s recovery to 76.64, the pair tanked below 76.25 to a fresh record low of 75.95 due to the comments from the Japanese Vice Finance Minister but the greenback swiftly recovered to 76.55.
Takehiko Nakao, Japanese Vice Finance Minister, said ‘we don’t have plans to intervene often, intervention is not for use as a daily tool; we don’t think recent yen moves really reflect economic fundamentals; there is no reason that the yen should be regarded as a flight-to-safety currency.’
Despite euro’s recovery to 1.4340 in Asian morning, the single currency fell below Thursday’s low at 1.4271 to 1.4250 due to an early selloff in European stock markets. However, the pair rallied strongly on dollar’s broad-based weakness together with strong cross buying of euro vs yen and sterling (eur/jpy and eur/gbp surged from 109.05 to 110.25 and from 0.8654 to 0.8747 respectively). The single currency eventually climbed to as high as 1.4453 in NY morning before retreating.
Although the British pound also rebounded to 1.6525 in European morning, the pair retreated to an intra-day low at 1.6444 because of sharp fall in European equities. However, cable rallied strongly in tandem with euro to 1.6618 in NY morning on dollar’s weakness but later pared almost all of its gain to 1.6456 ahead of NY closing due to active cross selling of sterling vs euro and yen.
The DJI closed down by 172.93 points, or 1.57%, to 10817.65 whilst the FTSE-100, CAC-40, and DAX also fell 1.01%, 1.92%, and 2.19% respectively.
Data to be released include next week:
no data on Monday;
Swiss trade balance, Germany manufacturing PMI, services PMI, EU manufacturing PMI, services PMI, consumer sentiment, Germany ZEW economic sentiment, ZEW current situation, U.K. CBI orders, Canada retail sales, U.S. new home sales on Tuesday;
Germany IFO business climate, current assessment, EU industrial orders, U.S. durable goods, ex. transport, ex. defense, monthly home price on Wednesday;
Germany consumer confidence, import price index, Swiss ZEW index, U.K. CBI distribution trade, U.S. jobless claims on Thursday;
Japan national CPI, national core CPI, Tokyo CPI, U.K. Q2 GDP, Swiss KOF indicator, U.S. Q2 GDP, GDP deflator, PCE core, U. Michigan survey final on Friday.