Daily Market Outlook by AceTrader

Market Review – 17/03/2010 22:49GMT

Euro falls on concern Greece’s financial troubles remains unresolved

The greenback weakened against higher-yielding currencies such as the Australian dollar and Canadian dollar on Wednesday, as the Fed’s commitment to low interest rates prompted investors to seek higher returns elsewhere. The euro fell from its five-week high against the dollar as sentiment remained negative on the single euro-zone currency. 

The single currency traded inside a range of 1.3763 – 1.3792 in Asia morning. The pair then rose on cross buying vs yen and gbp and hit a five-week high of 1.3817 at European opening but price quickly retreated from there on profit-taking and fell to 1.3727 in NY mid-day after a spokesman for German Chancellor Angela Merkel’s party said Greece should go to the International Monetary Fund if it needs aid, damping the currency’s allure. Euro then staged a rebound on short-covering in NY afternoon.  
The cable extended its recent rebound on Wednesday after the Federal Reserve kept the benchmark rates unchanged on the previous session. The pair traded relatively narrowly and made a low at 1.5210 in Asian mid-day before kicking off a rally in European morning. In UK, job reports came in better than expected as ILO unemployment rate was recorded at 7.8% versus the forecast of 7.9% and claimant count unexpectedly dropped by 32,300 versus the forecast of an increase of 8,000. Also, news came out that the BoE members voted 9-0 to leave its quantitative easing program unchanged at the last rate meeting. The encouraging job reports along with that supportive news lifted the pair up to 1.5382 in European mid-day before stabilizing.  
Once again, dollar versus yen went through another volatile day. The pair briefly fell to a low of 90.02 after the BOJ rate decision as a split vote of 5-2 suggested the rate-setting board might have difficulty in justifying the move. However, price quickly rebounded strongly from there to a high of 90.72 (2 pips below Tuesday high of 90.74) in European morning. The pair took another turn from there on active cross-buying in yen and nose-dived to 90.10 in NY afternoon b4 rebound. The Bank of Japan announced to keep its benchmark interest rate unchanged while doubling the size of the liquidity program to $221 billion for bank in the hope of fighting against the long lasting deflation.  
Economic data to be released on Thursday include Japan Leading indicators, Swiss trade balance, industrial production, ZEW index, EU Current account, trade balance, U.K. PSNCR, CBI industrial trend, US CPI, jobless claims, real earning, leading indicators, Fed survey and Midwest manufacturing on Thursday.