Euro struggles to find its base
Expectations that the European Central Bank may lower interest rates in the lackluster euro-zone economy kept the single currency weak against its U.S. rival during yesterdays trading.
Those expectations strengthened after the minutes of the Bank of England's last policy meeting showed that two of its nine voting members called for a rate cut from the current 4.75%. That combined with the Swedish central bank's unexpected half-percentage-point rate cut on Tuesday fed sentiment that Europe as a whole may be in monetary-easing mode.
Sterling understandably took a healthy swipe from the news, as the doves argued that with the outlook for UK consumer spending deteriorating, not acting quickly to cut interest rates would run the risk of an entrenched downturn. This impacted across the curve, and sent yield hunters scurrying.
In other news the dollar fell against the yen in Asia Thursday as traders bought yen on the view that top U.S. officials later today will put more pressure on China for a stronger yuan, which may eventually help persuade Beijing to change its exchange rate policy.
Some overseas hedge funds, U.S. investment banks and Japanese banks pushed the dollar down a third of a yen to an intraday low of Y108.54, although buying by some Japanese importers later helped the greenback pare some of its losses.
Speculators were betting that Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan may both urge China to take the yuan off of its dollar-peg of around CNY8.28 when they testify in Congress today about their country's economic relations with China.
Speculation over a yuan appreciation tends to spark yen buying as investors use the Japanese currency as a proxy for the non-tradable Chinese unit.
Data for the day begins in the UK with the June release of CBI Industrial Trends (11am). Look for a recovery to +5% off –1% last month, but bear in mind this is still well off the +22% peak a year ago, and consistent with output stagnating.
Next up at 1:30pm we have the US weekly jobless claims release. This is forecast for 340k off 333k last time out as early auto shutdowns boost the weekly reading.
Finally for the day at 3pm we have the US existing home sales release. Look for a slight dip from last months record 7.18bn to 7.05bn as the latest Beige book noted some signs of easing demand in the high end housing markets.
Those expectations strengthened after the minutes of the Bank of England's last policy meeting showed that two of its nine voting members called for a rate cut from the current 4.75%. That combined with the Swedish central bank's unexpected half-percentage-point rate cut on Tuesday fed sentiment that Europe as a whole may be in monetary-easing mode.
Sterling understandably took a healthy swipe from the news, as the doves argued that with the outlook for UK consumer spending deteriorating, not acting quickly to cut interest rates would run the risk of an entrenched downturn. This impacted across the curve, and sent yield hunters scurrying.
In other news the dollar fell against the yen in Asia Thursday as traders bought yen on the view that top U.S. officials later today will put more pressure on China for a stronger yuan, which may eventually help persuade Beijing to change its exchange rate policy.
Some overseas hedge funds, U.S. investment banks and Japanese banks pushed the dollar down a third of a yen to an intraday low of Y108.54, although buying by some Japanese importers later helped the greenback pare some of its losses.
Speculators were betting that Treasury Secretary John Snow and Federal Reserve Chairman Alan Greenspan may both urge China to take the yuan off of its dollar-peg of around CNY8.28 when they testify in Congress today about their country's economic relations with China.
Speculation over a yuan appreciation tends to spark yen buying as investors use the Japanese currency as a proxy for the non-tradable Chinese unit.
Data for the day begins in the UK with the June release of CBI Industrial Trends (11am). Look for a recovery to +5% off –1% last month, but bear in mind this is still well off the +22% peak a year ago, and consistent with output stagnating.
Next up at 1:30pm we have the US weekly jobless claims release. This is forecast for 340k off 333k last time out as early auto shutdowns boost the weekly reading.
Finally for the day at 3pm we have the US existing home sales release. Look for a slight dip from last months record 7.18bn to 7.05bn as the latest Beige book noted some signs of easing demand in the high end housing markets.
posted by Drs Search @ 8:36 AM
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