Acetrader-Daily Market Outlook 18-10-2010

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Market Review - 15/10/2010 20:57 GMT

Euro tumbles from a near 9-month high against dollar on heavy profit-taking

The single currency tumbled from a near 9-month high against dollar on Friday due to heavy profit-taking as technical indicators signalled recent decline in the greenback was overdone. U.S. Federal Reserve Chairman Ben Bernanke said that further quantitative easing might be warranted because of high unemployment and low inflation. The Australian dollar rose above parity against the greenback for the first time since currency controls ended in 1983.

Although the single currency dipped initially to 1.4008 in Asian morning, the pair rebounded strongly from there on renewed buying by Asian sovereign name and euro rallied above 1.4100 in European morning. Later, despite euro's brief rise to a near 9-month high of 1.4161 at the very beginning of Fed Bernanke's speech, the single currency reversed intra-day upmove and tumbled to as low as 1.3937 in NY afternoon on heavy long liquidation. Cross-selling in euro also weighed on the pair as eur/jpy, eur/gbp, eur/chf fell sharply from 114.66 to 113.55, 0.8796 to 0.8722 and 1.3480 to 1.3362 respectively.

U.S. Federal Reserve Chairman Ben Bernanke said that high unemployment and low inflation pointed to a need for further easing of U.S. monetary policy but he offered no details on the central bank's next step and the extent of the monetary easing program.

The greenback dropped from 81.62 against the Japanese yen in Asian morning after Thursday's selloff to a fresh 15-year low of 80.88 and edged lower in European session. Later, despite dollar's sharp fall to 80.88 again in NY morning after Bernanke's speech, the greenback recovered strongly and rose to 81.50 in NY afternoon.

Although the British pound retreated briefly from Thursday's 8-month high of 1.6067 to 1.5970 in Australian morning, buying interest there lifted cable up and sterling ratcheted higher in Asian and European sessions. The British pound later rose above said 1.6067 res to a fresh 8-month of 1.6108 in NY morning before retreating to 1.5975 in NY afternoon.

The Australian dollar surged above 1.0000 against the greenback but climbed briefly to a fresh 28-year high of 1.0004 in NY morning. However, it later retreated to as low as 0.9863 in NY afternoon due to dollar's broad-based rally.

Economic data to be released next week include:

New Zealand CPI, U.K. Rightmove hse prices, Japan Tertiary industry index , U.S. Foreign treasury buys, Net LT TIC flows, Capacity utilisation, Industrial prod'n, NAHB housing mrkt index on Monday, EU Current account (euro), Germany ZEW index, U.K. CBI Trends total orders, U.S. Building permits, Housing starts, Canada BOC rate decision on Tuesday, Australia Westpac leading economic index, Japan Leading indicators, Germany PPI, U.K. PSNCR , Public sector net bor., Canada Wholesale sales, on Wednesday, Japan Tertiary industry index , Swiss Trade balance (chf), ZEW index, Germany Services PMI , Manufacturing PMI, EU Manufacturing PMI, Services PMI, EU Consumer Confidence, U.K. Retail sales, Major banks mortgage appr., U.S. Jobless claims, Leading indicators, Philadelphia Fed survey, Canada Leading indicators on Thursday, Australia Import prices, Export prices, Germany Ifo index, Canada CPI, CPI core, Retail sales, ex. Autos on Friday.

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Acetrader-Daily Market Outlook 18-10-2010

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This article was published on 2010/10/18