Daily Market Outlook by AceTrader

Market Review – 25/02/2010 21:54GMT

Dollar falls on Greece and poor U.S. jobs data

Versus the Japanese yen, although the dollar reached an intra-day high of 90.33 in Australia, the pair then retreated and fell further due to worries about a possible downgrade to Greece’s sovereign debt after ratings agency Standard and Poor’s said late on Wednesday it may cut Greece’s BBB+ rating by one or two notches within a month.

The U.S. currency then picked up more downward momentum and hit an intra-day low of 88.80 on active cross-inspired buying in the yen due to risk aversion (eur/jpy tumbled from 122.29 high and penetrated 120 barrier to a 1-year low of 119.66) after the release of worse-than-expected U.S. jobless claims data. U.S. jobless claims rose unexpectedly to 496,000 from previous reading of 474,000 whilst U.S. durable goods excluding transportation equipment in January dropped by 0.6% versus economists’ forecast of 1.0% rise after upwardly revised 2.0% increase in December.   
Despite euro’s minor rebound to an intra-day high of 1.3548 in Australia, the single currency fell sharply to 1.3451 low in Asian mid-day on potential downgrade of Greek debt. However, the pair staged a rebound after the release of better-than-expected Germany’s unemployment change which rose by 7,000 m/m, much less than the consensus forecast of 19,000 increase before retreating again on worse-than-expected U.S. jobless claims. However, euro rebounded sharply to an intra-day high of 1.3572 in U.S. afternoon as U.S. equities pared most of the early losses. DJI ended the day down 53 points from -188 points.  
Cable retreated in tandem with euro from an intra-day high at 1.5421 at Asian opening and moved lower in European session on risk aversion due to concern Britain may struggle to tackle its own record deficit after the potential downgrades of Greek debt and talk of large Gilt related supply, though with no coupon payouts due until 8th March. The pair eventually hit an intra-day low of 1.5187 in NY mid-day on active cross selling in the British pound (eur/gbp rallied from 0.8773 to 0.8892 whilst gbp/jpy tumbled to 134.99 low) after the release of weaker-than-anticipated U.S. jobless claims.  
Economic data to be released on Friday include New Zealand Imports, Exports, Trade balance, Japan Manufacturing PMI, Tokyo CPI, National CPI, Industrial production, Retail sales, Construction orders, Housing starts, U.K. Nationwide hse price, Gfk survey, GDP, EU HICP final, Swiss KOF indicator, U.S. PCE core, Personal consumption, GDP annualised, GDP deflator, Chicago PMI, U. Michigan survey Final, Existing home sales and Canada Current account.