Market Review – 28/04/2010 22:13GMT
Euro rebounds strongly after FOMC decision despite early fall to a fresh 12-month low
Although the single currency rose to 1.3266 on active short-covering after German television station N24 reported Greece would receive more aid fm the EU and IMF than originally planned,
euro swiftly retreated from there and nose-dived to a fresh 1-year low of 1.3114 as Standard & Poor’s downgraded its debt rating on Spain by one notch to AA fm AA-plus with a negative outlook. The rating agency also warned that Spain would set for more protracted period of sluggish activity than previously assumed. However, euro then staged a strong rebound in NY afternoon after FOMC rate decision and ended the day at 1.3220.
Versus the Japanese yen, the greenback traded with a firm undertone throughout the day and reached 94.33 after Fed’s announcement to keep rate unchanged at 0.25%. In the FOMC statement, Fed repeated to keep rates exceptionally low for an extended period and kept Fed funds rate in zero to 0.25% range. Fed also stated that economic activity had continued to strengthen and labor market began to improve while inflation would be subdued for some time.
Reserve Bank of New Zealand kept its official rate unchanged at a record low of 2.5% as widely expected and stated it expected to increase rate and start removing stimulus in coming months. After RBNZ’s rate decision, nzd/usd once sparked to 0.7235 before retreating sharply.
On economic front, Japan March retail sales came in at 0.8% m/m and 4.7% y/y, much stronger than the forecast of -0.3% m/m and 3.6% y/y. In addition, Australia Q1 CPI came in at 0.9% q/q and 2.9% y/y versus forecast of 0.8% q/q and 2.8% y/y, respectively.
Economic data to be released on Thursday include: U.K. House price, Germany unemployment rate, E.U. Business climate, economic sentiment and U.S. jobless claims.