Market Review – 11/11/2010 23:20 GMT
Euro tumbles on European sovereign debt woes
Euro sank on Thursday as the ongoing concerns over eurozone peripheral debt weighed on the single currency. In addition, the selloff in U.S. stocks dented investors’ risk appetite, increasing the demand for the greenback as a safe-haven asset.
Despite the brief recovery from 1.3755 to an intra-day high of 1.3822 in Asian, the single currency then remained under heavy selling pressure throughout Asian, European and NY sessions. The euro eventually dropped to a low of 1.3637 in NY on concerns about Ireland’s ability to repay its debt before staging a minor recovery on profit-taking. Cross selling in euro especially versus the British pound pressured the single currency as eur/gbp tumbled from 0.8552 to a seven-week low of 0.8456. In addition, there is talk that U.S. think tank report saying the Federal Reserve may scale back the size of its quantitative easing plan.
The Irish/German 10-year govt. bond yield spread continued to widen and rose above 680 b.p, hitting a new high for the ninth straight session. Irish Finance Minister Brian Lenihan said the bond spread situation is serious.
Although the greenback retreated from Wednesday’s high of 82.80 to 82.04 against the Japanese yen in Thursday’s Asian morning and the pair traded sideways in Asian afternoon and European sessions, the dollar’s broad-based firmness lifted the pair up and the buck ratcheted to a session high of 82.61 in NY afternoon as weakness in U.S. stocks dented risk appetites. Cisco System Inc. shares dropped more than 15% as it gave a dismal earnings outlook.
Although the British pound extended the previous session’s rally to 1.6179 earlier, the intra-day decline in euro dragged cable lower, however, cross buying in sterling versus euro cushioned the pound’s downside. Cable hit an intra-day low of 1.6082 in NY afternoon before recovering.
Economic data to be released on Friday include:
U.K. N’wide Consumer Confi. , Germany GDP flsh , EU GDP , Industrial prod’n , U.S. U. Michigan survey Prel.