Market Review – 29/08/2011 21:58 GMT
Dollar rises versus yen and franc on risk appetite
The greenback strengthened against the Japanese yen and the Swiss franc Monday due to rally of U.S. and European stock markets as solid U.S. economic data raised investors’ appetite to buy riskier assets instead of holding safe-haven currencies.
Versus the Japanese yen, the greenback traded narrowly in Asia on dollar’s weakness before dropping to 76.58 in European session. However, the pair climbed to 77.02 in NY morning on risk appetite together with the rally of U.S. and European equities before retreating to 76.81 ahead of NY closing.
The DJI gained 254.71 points, or 2.26%, to 11539.25 whilst the CAC-40 and DAX closed up 2.16% and 2.39% respectively. U.K.was closed on market holiday.
The greenback was supported by better-than-expected U.S. economic data. U.S. personal income and personal spending in Jul increased 0.3% and 0.8% vs forecasts of 0.3% and 0.5% respectively. PCE index M/M and Y/Y in Jul came in at 0.4% and 2.8% whilst core PCE M/M and Y/Y were up 0.2% and 1.6% respectively.
Earlier in Asia, Japan’s Finance Minister Yoshihiko Noda was elected as the next leader of the DPJ and the vote for PM is scheduled for Tuesday.
Despite euro’s retreat to 1.4466 in Asia, the single currency surged to 1.4550, it’s highest level since early July on improved risk appetite in thin European session but price pared intra-day gain and retreated to 1.4485 at New York open. Although the pair met renewed buying and rebounded to 1.4546 on the rally of U.S. and European equities, offers around 1.4550 sent euro back to 1.4491 in NY afternoon before stabilising.
The British pound briefly dipped to 1.6322 in Australia but edged higher on risk appetite in Asian and European sessions. Cable eventually climbed to an intra-day high of 1.6454 in NY morning on cross buying of sterling but retreated in tandem with euro to 1.6387 in NY midday before recovering.
Data to be released on Tuesday include:
New Zealand building permits, Japan household spending, unemployment rate, retail sales, Australia building approvals, U.K. mortgage approval, EU business climate, economic sentiment, industrial sentiment, consumer sentiment, Canada PPI, current account, U.S. SnP/CS home price, consumer confidence, FOMC minutes.