Market Review – 22/03/2010 22:50GMT
Euro rebounds on short-covering before EU summit
Euro rebounded from a 3-week low against the dollar on Monday as renewed risk appetite lifted up the single currency, high-yielding currencies and U.S. equities. Without major economic report on Monday, the greenback declined against most major currencies.
The single currency fell against the greenback Monday in Asian trade as sentiment remained bearish because Europe was still struggling to find answers for Greece’s credit crisis but talks of option protection at 1.3500 has dissuaded any serious attempt to take the pair lower and euro held above the 1.3500 level during European morning. However, the pair plunged below said level to an three-week low of 1.3463 at NY opening after Greek Deputy Prime Minister Theodoros Pangalos commented that weak euro is beneficial to Germany as it may boost the country’s exports and Germany allows its banks to speculate against Greece. However, profit-taking bids emerged from there and pair rebounded strongly above 1.3550 level to 1.3569 in NY afternoon on broad-based dollar weakness.
The greenback has traded very narrowly versus the Japanese yen in Asia inside a range of 90.40 – 90.53 as Tokyo market was closed on a national holiday. The pair managed to rise to a day high at 90.78 briefly at European opening but then consolidated in a range of 90.40 – 90.62 before falling sharply to an intra-day low at 89.83 at NY opening on active cross-buying in yen but bids immediately emerged there and price rebounded strongly to around 90.18 before stabilizing.
The Swiss franc strengthened to the highest level against the single currency since 1999 as traders continued to speculate the SNB relaxing a year-old policy of selling the currency to curb its strength. The pair fell below Friday’s low of 1.4318 to a low of 1.4308 in NY morning before rebound.
Economic data to be released on Tuesday include: Japan BOJ releases minutes, U.K. CPI, RPI, Canada leading indicators, U.S. existing home sales and housing price.
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