Market Review – 09/07/2010 21:40 GMTEuro retreats from a two-month high on long liquidationAlthough the single currency briefly rose above Thursday’s high of 1.2713 to a 2-month high of 1.2723 in European morning, good selling interest emerged there and the pair later tumbled to an intra-day low of 1.2606 in NY mid-day on profit-taking before staging a recovery in NY afternoon.
In other news, ECB president Trichet said it is too early to declare that the financial crisis is over and budget cuts by governments will not hinder economy growth. He indicated we have a very good anchoring of inflation expectation and ECB bond-buying programme is in line with price stability.
ECB council member Stark said the European Central Bank could stop buying government bonds if the recent improvements in debt markets continue.
Versus Japanese yen, the greenback extended the rally which began on Wednesday due to return of risk appetite as global stocks continued to rise , price rose above previous day’s high of 88.64 to 88.71 in Asia partly due to latest report which showed the embattling DPJ would likely win about 50 or even fewer seats in Sunday’s upper house election, well short of the target 54 seats the party has up for re-election. However, profit-taking caused dollar to retreat 88.37 in Europe and the pair traded narrowly for the rest of the day due to the absence of significant U.S. economic data. The greenback eventually closed the day at 88.65.
Although the British pound rebounded from 1.5132 in Asia on cross unwinding in sterling and rose to 1.5205 in European morning after the release of U.K. trade data, the pound quickly retreated from there and tumbled to an intra-day low of 1.5051 on cross selling in sterling (eur/gbp rose from 0.8334 to 0.8399) in NY afternoon before stabilising. U.K. Global and non-EU goods trade balance in May came in at -8.062 and -4.487 bln pounds respectively, the biggest deficit since Jan, versus the expectation of -7.0 and -3.8 bln pounds.
The Canada dollar surged on stronger-than expected jobs data and usd/cad tanked from 1.0455 to 1.0296 as Canada’s unemployment rate in June came in at 7.9%, versus the forecast 8.1%.
On the economic front, U.S. wholesale sales unexpectedly dropped by 0.3% against the economists’ forecast of 0.5% rise whist wholesale inventories rose by 0.5% versus the expectation of 0.4% increase.
Economic data to be released next week include: Japan Domestic CGPI, U.K. GDP, Current account on Monday, U.K. RICS house prices, BRC retail sales, CPI, RPI, DCLG house prices, Australia NAB business confidence, Japan Industrial production, capacity utilisation, Consumer confidence, Germany ZEW index, EU ZEW survey, U.S. Trade balance, Canada Exports, Imports, Trade Balance on Tuesday, New Zealand Retail sakes, U.K. ILO unemployment, Claimant count, EU Industrial production, HICP final, U.S. Export price, Import price, Retail sales, Business inventories on Wednesday, Japan BOJ rate decision, Swiss ZEW index, U.S. Jobless claims, PPI, Capacity utilisation, Industrial production, Philadelphia Fed survey on Thursday, U.S. CPI, Real earnings, Net LT TIC flows, U. Michigan survey, Canada Leading indicators on Friday.
