Daily Market Outlook by AceTrader

Market Review – 04/03/2010 22:51GMT

Euro tumbles on ECB n Deutsche Bank’s downgrade by Moody’s dollar surged broadly

The greenback rose broadly on Thursday and the single currency declined sharply after the ECB stated it would not be ‘appropriate’ for the International Monetary Fund to aid Greece, adding that recovery would be uneven and reducing the chances of a near-term rise in record low euro zone interest rates.  

Euro has traded with a soft undertone in Asia but staged a pullback to 1.3694 in European morning. Price fell sharply from there and picked up more downward momentum after the ECB kept rate remained unchanged at 1% as expected. After the rate decision, ECB’s Trichet said eurozone economy is expected to grow at moderate pace in 2010 and inflation will be around 1% in near term. He also indicated ECB will keep its special term, one-month liquidity operations, maintaining the same rate. Besides he opposed IMF aid to Greece, saying this act as ‘not appropriate’. The single currency tumbled to an intra-day low of 1.3551 in NY mid-day after Moody’s downgraded Deutsche Bank’s rating.   
Versus the yen, dollar extended Wednesday weakness in Asia and price hit an intra-day low of 88.14 ahead of European opening. However, the pair staged an abrupt reversal from there and rose sharply in Europe and NY. Price eventually hit an intra-day high of 89.27 in NY afternoon after data showed a decline in U.S. jobless claims from previous reading of 496.0K to 469.0K, stirring hope about the U.S. economy. Markets expected Friday’s non-farm payrolls to show employers cut 50,000 jobs last month, though analysts expect some of that will have been influenced by snowstorm. The pair closed the day up over 0.6%. On other news, after the US market has closed, Reuters reported that ‘BOJ has begun examining possible monetary policy easing’. Newspaper also said BOJ is likely to make such decision at its next policy meeting on Mar 16-17 or in the following month.  
Despite cable’s weakness in Asia, price staged a strong bounce from 1.5025 and rose further after BOE kept its rate unchanged at record low of 0.5% and sterling hit an intra-day high of 1.5136 in NY morning, however, cable tumbled from there after the release of stronger-than-expected U.S. jobs data and price hit an intra-day low of 1.5006 in NY mid-day before stabilising.  
Data to be released on Friday include U.K. PPI core, PPI input, PPI output, Germany Factory orders, U.S. Avg. hourly earnings, Non-farm payrolls and Unemployment rate.