Market Review – 14/04/2010 21:26GMT
The dollar falls on Bernanke’s comments but rebounds later
The greenback weakened broadly on Wednesday after U.S. Federal Reserve Chairman Ben Bernanke’s cautious notes on economy and dovish comments on U.S. interest rates.
Although the greenback rose to 93.73 against the Japanese yen in NY morning after the release of stronger-than-expected retail sales data, the pair nose-dived afterwards to an intra-day low of 92.82 in NY mid-day after Federal Reserve Chairman Bernanke stated the Fed expected ‘very low, extremely low ‘ interest rates for an ‘extended period’ in his testimony. However, the pair rebounded from said intra-day low in NY afternoon. In other news, the Federal Reserve said in the Beige Book that the U.S. economy ‘strengthened’ in most regions in March while the U.S. core retail sales rose unexpectedly by 0.6% in March versus the economists’ forecast of 0.5% together with upwardly revised 1.0% in February . A combination of robust retails sales data and strong corporate earnings brought return of risk appetite which lifted stocks and commodity currencies. DJI ended the day up 103.69 points at 11123.11.
Despite the single currency’s rise to 1.3666 in Asian mid-day on active short-covering together with cross buying in euro versus the yen and sterling, euro fell to an intra-day low of 1.3595 after the release of stronger-than-expected U.S. retail sales data. However, euro rebounded from there and hit an intra-day high of 1.3679 in NY mid-day on dollar’s broad-based weakness. Eurozone industrial production rose by 0.9% m/m and 4.1% y/y in February, much better than the economists’ forecast of no change and 2.7% rise respectively. Earlier, euro was once under pressure due to market’s talk that Moody’s may downgrade Greek credit rating and EU’s comments that Portugal may need more fiscal cuts.
The Singapore dollar hit a 20-month high of 1.3735 against the U.S. currency after the central bank tightened monetary policy by revaluating the currency unexpectedly.
Economic data to be released on Thursday include Japan Capacity utilisation and Industrial production, U.S. Jobless claims, Industrial production, Philadelphia Fed survey, NAHB housing market index.