Daily Market Outlook by AceTrader

Market Review – 17/02/2010 22:47GMT

Dollar gains on upbeat U.S. data and possible assets sales program

The dollar rose against its major counterparts after housing and manufacturing reports beat forecasts and Federal Reserve minutes showed officials proposed to lower the amount of the central bank’s assets.   

Euro extended Tuesday’s rise and reached intra-day high at 1.3789 in European morning. The single currency fell sharply as traders booked profits from Tuesday’s short-squeezing rally after the release of slightly weaker-than-expected Eurozone trade surplus which came in at 4.4 billion euros versus the forecast of 5.0 billion euros with downwardly revised 4.0 billion euros in November and a defence ministry spokesman said ‘Germany expects Airbus parent to respond quickly to a package of international support offered by European governments for the A400M military transporter’.   
The pair declined further following the release of stronger-than-anticipated U.S. data. U.S. Jan housing starts rose by 2.8% m/m to 591k versus the consensus forecast of 580k from the revised previous reading of -0.7% while building permits dropped by 4.9% m/m to 621k compared to economists’ forecast of -5.1% m/m to 620k with the previous reading of 10.90% rise. Euro then picked up more downward momentum in reaction to the news that China business council president said China is expected to resume appreciating yuan this year and a political ally of Germany’s Chancellor Angela Merkel said “not a single euro” should go to Greece. The single currency hit intra-day low of 1.3585 in U.S. afternoon after minutes from the Federal Reserve’s January meeting showed members saw a need to begin a program of assets sales in the near future and the economic recovery to continue.  
Versus the Japanese yen, the greenback rose on signs of a stronger global recovery and expectation the Federal Reserve may begin a program of assets sales in the near future. The pair rallied in U.S. morning after China’s news and the release of higher-than-expected U.S. industrial production data which rose by 0.9% versus economists’ forecast of 0.7% increase. The dollar reached intra-day high at 91.39 in U.S. afternoon after the release of FED meeting minutes. On other news, Tankan report was released. Tertiary industry index dropped by 0.9% (versus the forecast of -0.2%). Machine tools orders rose by 189.4% from the previous reading of 192.0%.  
Sterling rose along with euro and hit intra-day high at 1.5816 against the U.S. currency in European morning. Cable then fell as U.K. jobless claims in Jan. climbed to a 14-year high of 23.5k while unemployment remained at 7.8% and MPC minutes showed policy makers voted 9-0 on a pause in bond-purchase plan. The pair weakened further and reached intra-day low of 1.5667 in U.S. afternoon after the release of better-than-expected U.S. data, China’s news and FED meeting minutes.  
Economic data to released on Thursday include NAB business confidence, Japan BOJ rate decision, leading indicators, Swiss trade balance zew index, U.K. PSNCR, CBI industrial trend, Canada CPI, CPI core, U.S. jobless claims, PPI, PPI core, leading indicators and Philadelphia Fed survey.