Market Review – 06/04/2010 22:02GMT
Fed minutes suggests rates could stay low for some time
On Tuesday, the single currency declined the most against the dollar in almost two weeks as Greece tried to end speculation it may be having doubts about a plan that European Union and International Monetary Fund provides support in refinancing its debt. Euro traded with a soft undertone throughout the day and price fell to an intra-day low of 1.3355 in NY mid-day before rebounding after the release of the Fed minutes which displayed concern on U.S. recovery. In other news released earlier, it was reported that Greece wants to bypass IMF involvement if it needs assistance because the conditions would be too stringent. The nation’s finance minister denied it.
Versus the yen, the buck remained under pressure on Tuesday after hitting a 7-month high of 94.78 in the previous session. The pair eventually tumbled to an intra-day low of 93.66 in NY afternoon after the release of Fed’s meeting minutes. The minutes showed policy makers see signs of a strengthening recovery that could be hobbled by high unemployment and tight credit. Some warned of raising interest rates too soon. Conclusively, U.S. interest rates could stay low for even longer than investors have been anticipating as suggested by the tone of the minutes.
RBA Glenn Stevens raised the benchmark to 4.25% on Tuesday and said rates need to ‘be closer to average’ to amid an expanding domestic economy. Despite a brief fall to 0.9165 before RBA’s rate decision, aussie took off after RBA’s hike as the decision was not fully anticipated and RBA’s comments on the economy were positive. Price reached an intra-day high of 0.9289 in NY afternoon before stabilising.
Economic data to be released on Wednesday include: Japan BOJ Interest Rate, Swiss Retail sales, Germany Services PMI, EU Services PMI, GDP, U.K. Services PMI, U.K. Services PMI.