Daily Market Outlook by AceTrader

Market Review – 13/03/2010 02:16GMT

Dollar falls broadly on Friday on long liquidation

The greenback and Japanese yen weakened across the board on Friday versus most of their major counterparts. In Asia, the single currency traded with a firm undertone following Thursday’s strong rise.

 Traders later reacted to earlier news of President Obama had picked San Francisco’s Fed President Janey Yellen as top contender for the post to succeed Donald Kohn as Fed vice chairman as Yellen is considered to be a strong advocate of continued loose monetary policy . Later in Europe, rumors came out on recommendation by the research department of a well respected US investment bank to long EUR/USD triggered a wave of euro buying, this action had triggered more stoploss buying in early European trading. The single currency picked up more upward momentum after the release of better-than-expected industrial production data from Eurozone. Industrial production rose 1.7% (-1.3% as forecasted) from December, which is the strongest rise since 1990. The euro rose to a 4-week high versus the dollar at 1.3796 in European morning before retreating on profit-taking.  
The British pound initially traded sideways in Asia before rising strongly in tandem with the euro in European morning. The intra-day rally was supported by result of another opinion poll showing a 13% lead for the Tories. Cable eventually climbed to a 2-week high of 1.5218 in NY mid-day before stabilising.  
Versus the yen, dollar went through a very volatile trading day. The pair traded with a soft undertone in Asia and European morning and fell to a low of 90.16 due to broad-based selloff in the greenback in European trading. However, price found support there and staged a strong rebound. The pair later surged above Thursday’s high of 90.72 to a 3-week high of 91.09 in NY morning on renewed cross-selling in yen after U.S. retail sales came in much better-than-expected, rising to 0.3% vs. forecast of a decrease of 0.2%. However, the pair reversed once again on proft-taking and fell to around 90.30 in NY afternoon due to renewed broad-based weakness in the dollar.   
Economic data to be released on next week include: Japan consumer confidence, Swiss PPI, E.U. employment change, US manufacturing index, industrial production, capacity utilization and housing market index on Monday, Australia RBA release minutes, U.K. DCLG house prices, EU HICP final, ZEW survey, U.S. Building permits, housing starts, import and FOMC rate announcement on Tuesday, Australia Westpac leading economic index, Japan BOJ rate decision , U.K. Claimant count, unemployment rate, average earning, E.U. labour cost, U.S. PPI and wholesales sales on Wednesday, Japan Leading indicators, Swiss trade balance, industrial production, ZEW index, EU Current account, trade balance, U.K. PSNCR, CBI industrial trend, US CPI, jobless claim, real earning, leading indicators, feb survey and Midwest manufacturing on Thursday, Germany PPI, Canada CPI and retail sales on Friday.