Market Review – 25/08/2011 21:58 GMT
Dollar gains ahead of Bernanke’s speech at Jackson Hole
The greenback rose against other major currencies on Thursday on renewed risk aversion together with the selloff in U.S. and European equities on speculation that Federal Reserve Chairman Ben Bernanke will not unveil further monetary easing at Fed’s annual economic conference in Jackson Hole, Wyoming on Friday.
Versus the Japanese yen, although the greenback dropped briefly from Asian high of 77.15 to 76.85, the greenback rose strongly on renewed cross selling of jpy on speculation that Japan’s package may boost USD funding as Japan’s $100 billion credit line unveiled on Wednesday for companies investing overseas, tapping its foreign reserves despite being called ‘measures to address JPY appreciation.’ The pair eventually climbed to a 2-week high of 77.70 in NY afternoon on renewed risk aversion before retreating.
The single currency traded narrowly in Asia and then rose to its day high of 1.4475 in European morning on the initial gain in European stocks before retreating. Despite euro’s recovery to 1.4457 in NY morning, price then tumbled sharply to 1.4328 due to the selloff of U.S. and European equities together with comments from spokesmen for the IMF and German Finance Ministry before staging a recovery to 1.4389.
The IMF spokesman said ‘global economic activity has weakened, become more uneven, outlook has deteriorated.’ Later, the spokesman from German Finance Ministry said ‘we are not planning a general short-selling ban.’
The British pound traded sideways in Asian session and briefly recovered to 1.6398 in European morning. However, cable tumbled in tandem with euro to 1.6260 before stabilising.
On the data front, U.S. initial jobless claims were worse-than-expected at 417K vs forecast of 405K, the prior figure was revised up to 412K. U.K. CBI retail sales balance for Aug. was weaker than expected at -14 vs forecast of -5.
The DJI fell by 170.89 points, or 1.51%, to 11149.82. FTSE-100, CAC-40, and DAX were down by 1.44%, 0.65%, and 1.71% respectively.
Data to be released on Friday include:
Japan national CPI, core CPI, Tokyo CPI, Swiss KOF indicator, U.S. GDP annualised, GDP deflator, PCE core, U. Michigan survey.