Daily market report Dollar Rises Versus Most Peers Before Fed Meeting; Yen Gains - Euro Jobless Rate Seen at Record Even as Recession Ends - British Pound Adrift as Market Awaits BoE Decision The dollar strengthened versus the majority of its most-traded peers amid expectations the Federal Reserve will reiterate plans this week to reduce stimulus if economic performance continues to show signs of improvement. Japan’s currency advanced against all of its 16 major peers after Japanese retail sales fell and Chinese industrial companies reported slowing profits, boosting demand for haven assets. The Bloomberg Dollar Index rose from almost six-week low after an industry report showed pending U.S. home sales declined less than forecast. The Federal Reserve’s Open Market Committee starts a two-day meeting tomorrow. The dollar rose 0.1 percent to $1.3262 per euro at 5 p.m. New York time. The greenback slid 0.3 percent to 97.96 per yen, falling for a third day versus its Japanese counterpart. Japan’s currency appreciated 0.4 percent to 129.91 per euro. Sterling briefly tested highs against the Dollar before trading throughout the remainder of the session to close around 1.5325. uro-region unemployment probably stayed at a record high in June even as the economy emerged from the longest recession since the single currency’s creation, economists said. The jobless rate remained at 12.2 percent last month, according to the median of 36 forecasts in a Bloomberg News survey. That would match the result for May, which was the highest since records began. Eurostat, the European Union’s Luxembourg-based statistics office, will publish the data tomorrow at 11 a.m. The 17-nation euro economy is showing signs of emerging from its recession and resuming growth after manufacturing output unexpectedly expanded in July for the first time in two years and German business confidence improved for a third month. Unemployment will still continue to rise in the coming quarters, according to a separate survey. In the euro area, unemployment will keep rising to 12.4 percent in the fourth quarter and average 12.3 percent next year, according to the Bloomberg monthly survey of economists. The economy, which has contracted for a record six quarters, probably stagnated in the three months through June and will return to growth this quarter, the survey shows. European Central Bank President Mario Draghi is banking on a recovery “later in the year and in 2014,” according to his July 4 policy statement. He pledged to keep interest rates low for an extended period of time amid low inflation, a subdued economic outlook and “weaker and weaker” credit flows. The sterling rose against its high-yield counterparts Monday but slid against the US dollar, Japanese Yen and Euro. What are we to take away from this performance? This is a sign that currency is caught in the broader market current and no generating momentum of its own. That could very well end later in the week when the Bank of England (BoE) meets with a meaningful shift in policy guidance – an actual change in policy may be expecting too much. Yet, in the meantime, the FX market will bide its time as the pound struggles to offset crosswinds. Meanwhile, net consumer credit and mortgage approvals cooled while the CBI’s retail sales survey jumped. Have a good day!
Posted on: Tue, 30 Jul 2013 09:31:01 +0000
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