Market Review – 07/03/2011 20:11 GMT
Euro falls in NY as continued rise in oil prices dampens risk appetite
Euro reversed intra-day gains on Monday as the continued rise in oil prices dented risk-appetite, decreasing the demand for higher-yielding assets. On the New York Mercantile Exchange, crude oil for April delivery settled at $105.44 a barrel on Monday, the highest close since Sept. 2008, as supply disruption worries with violence in Libya escalating n investors feared unrest wud affect other producers in the Middle East n North Africa.
Earlier, despite euro’s brief retreat to 1.3956 in European morning after Moody’s downgraded Greece rating to B1 fm Ba1, renewed buying interest there lifted the single currency and the pair later climbed abv last Friday’s high of 1.4009 to a fresh 4-month high 1.4036 b4 retreating sharply to around 1.3957 in NY afternoon session.
Moody’s cut Greek debt rating by three notches n kept it on review for further downgrades on Monday, citing significant risks to its fiscal restructuring program n chance of a voluntary debt restructuring.
The British pound tumbled on Monday due to dollar’s broad-based rebound in NY session. Despite the pound’s intra-day brief but strong rise fm 1.6240 to 1.6342 (just 2 pips shy of last Wednesday’s 13-month high of 1.6344), price then tanked to the day’s low of 1.6184 partly due to news that BoE hawk Andrew Sentance will be replaced at the end of May, however, this news was made known in February. Cross selling in sterling vs the euro also weighed on the pound as the eur/gbp cross pair extended recent upmove to a 5-week high of 0.8635 on Monday.
Britain’s government appointed Goldman Sachs economist Ben Broadbent to succeed Bank of England hawk Andrew Sentance on the BOE’s Monetary Policy Committee when his term expires at the end of May. In other news quoting from Bloomberg, U.K. Prime Minister David Cameron told a local enterprise summit in Coventry central England that business can’t
rely on a further easing of momentary policy to stimulate growth. He also added that ‘we can’t make monetary policy any looser than it is, what with rates as they are’.
Data to be released on Tuesday include :
Australian NAB business confidence, Japanese current account n economic watch DI, U.K.
BRC retail sales n RICS house prices , Swiss unemployment rate, Germany factory orders,
Canadian housing starts