Market Review – 22/08/2011 22:00 GMT
Euro retreats on risk aversion
The single currency pared its early gain Monday on risk aversion due to the retreat of U.S. equities. Investors are focusing on the August 26 conference in Jackson Hole by Federal Reserve Chairman Ben Bernanke who may indicate the Fed will increase monetary stimulus to boost the economy.
Despite euro’s brief rise to 1.4393 in Asia, the single currency edged lower to an intra-day low of 1.4347 before surging to 1.4434 on the rally in European equities together with cross buying of euro. However, the pair pared most of its gains and fell to 1.4366 in NY morning as U.S. stocks retreated together with cross selling of euro vs jpy and chf and then dropped further to 1.4356 ahead of NY closing
DJI opened up by more than 1%, however, it pared its initial gain and closed the day at 10854.56, up by 37.00 points or 0.34%. FTSE-100, CAC-40 and DAX once rallied by more than 2% but they later retreated and eventually closed up by 1.08%, 1.14%, and down by 0.11% respectively.
Versus the Japanese yen, the greenback rose to 76.87 in New Zealand following Sunday’s comments by a senior Japanese government official, who said that there is no change in Japan’s stance of taking decisive action in the currency market depending on market’s developments. Despite dollar’s retreat to 76.57 in Asian morning, the pair spiked to 77.21 on speculation of possible intervention from Bank of Japan but price came off quickly and then traded around 76.80 in European and NY sessions.
Although the British pound traded sideways in Asia after last Friday’s selloff from 3-month high of 1.6618 to 1.6456 and then rose to 1.6522 in NY morning, cable fell in tandem with euro to 1.6435 before recovering to 1.6489 in NY afternoon due to cross buying of gbp vs euro.
Data to be released on Tuesday include:
China HSBC flash manufacturing PMI, Japan Machine tools orders, Swiss Trade balance (chf), Germany Manufacturing PMI, Services PMI, ZEW Economic Sentiment, ZEW Current Situation, EU Manufacturing PMI, Services PMI, ZEW economic sentiment, Consumer Sentiment, U.K. BBA Mortgage Approvals, CBI Orders, Canada Retail sales, U.S. New home sales, Richmond Fed Manufacturing.