Market Review – 24/02/2010 22:49GMT
Greenback falls on Bernanke’s dovish comments and poor U.S. housing data
Although the greenback against the Japanese yen briefly rose to an intra-day high at 90.36 at European opening after trading sideways in Asian session, the pair retreated from there and declined further to 89.76 low in NY morning due to the weaker-than-expected U.S. new home sales and Bernanke’s dovish comments which emphasized the central bank would keep its benchmark interest rate exceptionally low for some time to encourage demand by consumers and businesses, prompting DJI to end the day up 91 points to 10374.
Euro staged a rebound from an intra-day low of 1.3503 in Asia after Tuesday’s selloff to 1.3496 low and picked up more upward momentum after the release of eurozone industrial orders which rose by 0.8% m/m and 9.5% y/y respectively (versus the economists’ forecast of -1.0% m/m as well as 6.0% y/y). Despite subsequent long liquidation in European afternoon, the single currency rose further as new U.S. home sales in January dropped unexpectedly by 11.2% to 0.309 million from the revised previous reading of -3.9% m/m and 0.348 million, compared to the consensus forecast of 3.5% increase to 0.36 million. The pair rallied to 1.3627 high after Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is in a “nascent”recovery that still requires low interest rate. However, euro retreated sharply after Standard and Poor’s said it may downgrade Greece’s BBB+ rating by one or two notches within a month, citing downside risks to growth that could hinder the country’s deficit-cutting plan.
The British pound rose in tandem with euro and hit an intra-day high of 1.5476 in European morning. Cable then retreated sharply in U.S. morning on active cross selling in sterling especially versus euro. Although the pair rebounded sharply after the release of U.S. new home sales and Bernanke’s testimony, sterling retreated once again on long liquidation and reached as low as 1.5386 in U.S. afternoon.
Economic data to be released on Thursday include New Zealand business confidence, Swiss employment level, Germany Unemployment rate, EU Business climate, Economic sentiment, Consumer confidence, U.K. CBI distribution trade, U.S. Durable goods, Jobless claims and House Price Index.