#Daily_market_report Dollar Rises to Highest in 3 Weeks on Yellen Comments - EUR/USD is digging the bottom around 1.3520 - British Pound, Yields Unable to Rally on Strong Jobs Data The yen strengthened to a five-month high against the euro as a decline in U.S. stock futures and most Asian shares spurred demand for safer assets. Japan’s currency rose versus all its 16 major peers as the U.S. and European Union imposed extra sanctions on Russia over Ukraine. The euro fell for a third day versus the yen before a European report forecast to confirm inflation stayed below the central bank’s goal. A gauge of the dollar was near a four-week high as economists said U.S. data will show housing starts and a measure of manufacturing rose. New Zealand’s currency dropped for a sixth day as traders pared bets on higher interest rates. The Bloomberg Dollar Spot Index has risen 0.4 percent in the past week as signs the world’s largest economy is gaining traction fuels speculation the Federal Reserve is moving closer to raising interest rates. U.S. housing starts increased to a 1.02 million annual pace in June from 1 million in the previous month, according to a Bloomberg survey before today’s Commerce Department report. Separate data today will show manufacturing in the Philadelphia region expanded for a fifth month in July, while building permits increased in June, other surveys show. Futures prices show a 76 percent chance the Fed will raise its benchmark rate by September 2015, up from a 69 percent probability at the start of this month. The central bank has kept the federal funds rate in a range of zero to 0.25 percent since December 2008. EUR/USD opened the day at 1.3524, made an attempts to rise above 1.3530, but stumbled and came back to 1.3520 area. The euro is still trading close to monthly lows as there is lack of data to be happy with. The Portuguese issue is still here, but went to the background. And today we can get another reason to move, as euro zone CPI data is scheduled for release. If inflation data confirms the downtrend, and comes out below the expectations, it may be another factor for the euro selling with initial target at 1.3505 support level. Pound traders have had two rounds of positive event risk to feather interest rate expectations. And yet, the sterling was unable to mark the critical progress that would see crosses like GBPUSD scale 1.7200 and new multi-year highs. The combination of the bigger-than-expected jump in inflation readings reported Tuesday and the downtick in unemployment rate to a five-and-a-half year low just this past session offers a material improvement in the central bank’s policy focal points. And yet, Gilt (government bond) yields and swaps failed to add buoyancy to rate speculation. Such reservations are a concern for bulls and suggest the markets have already fully priced in the early first rate hike by the BoE. Moving up the time frame may not be enough. The pace of tightening after the first may be new frontier for speculation. Have a good day!
Posted on: Thu, 17 Jul 2014 07:51:48 +0000
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