Daily Market Outlook by AceTrader

Market Review – 25/03/2010 22:53GMT

Euro falls to 10-mth low as Trichet’s comments weigh

The euro weakened to a 10-month low against the buck on Thursday after a European draft agreement on aid for debt-stricken Greece showed that the euro zone and the IMF will share the burden.  

The single currency, in a day of volatile trade, had fallen to 1.3283 in Asia after European Central Bank President Jean-Claude Trichet said that if the IMF took responsibility for bailing out Greece it would send a negative message and considered that would be ‘clearly be very, very bad.’ The pair rebounded though, after office of French President said that Sarkozy and German Chancellor agreed on a joint approach ahead of the EU summit and the pair hit an intra-day high of 1.3388 in NY mid-day on the news. However, renewed selling interest emerged there and price tumbled below said 1.3283 low and reached 10-month low of 1.3267 in NY afternoon before stabilizing.  
On Thursday, the Dubai government announced to support Dubai World’s debt reconstructing with $9.5 billion as the state-own holding company asked creditors to wait up to eight years to get all their money back. This announcement has given the sterling a lift as many U.K banks were exposed to the Dubai World’s debt issue. The British pound rose from 1.4854 in Asian mid-day to a high at 1.5005 in European morning after retail sales data from U.K. showed the country’s retail sales has rebounded more than economists forecast in February and that is the biggest jump since May 2008 as Britons raised spending on goods from electrical items to auto fuel. This figure is a sign that the economy is slowly improving which is in line with expectations. However, renewed selling interest emerged and pushed the cable below said low to 1.4798 in NY afternoon before stabilizing.  
Although the greenback briefly dipped to 91.76 in Asian morning against the yen, the pair had been firm throughout the day on broad-based dollar strength and active cross-selling on yen. The pair eventually rallied above Wednesday high of 92.42 to an intra-day high of 92.96 in NY afternoon.  
On the data front, reports showed the number of people applying for unemployment benefits in the U.S. fell 14,000 in the week ended March 20 to a seasonally adjusted 442,000. The four-week average declined by 11000 to 453,750. In the week of March, about 3.7 million jobless worker were receiving extended federal benefits, down 345,000 from the week before.   
Economic data to be released on Friday include: New Zealand trade balance, Japan CPI, Germany import price index, U.S. PCE, GDP and University of Michigan survey (final) .