Acetrader-Daily Market Outlook-7-10-2010

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Market Review - 06/10/2010 22:17 GMT

Dollar sinks against yen and euro on U.S. easing speculation

The greenback tumbled to a fresh 15-year low against the Japanese yen and a new 8-month low against euro on Wednesday, as weak U.S. private-jobs data reinforced speculation that U.S. Fed would start a second round of quantitative easing to boost the economy.

Despite dollar's recovery from Tuesday's low of 82.96, the greenback continued to edge lower from 83.27 against the Japanese yen in Asian and European sessions on Wednesday and price then sank to a fresh 15-year low of 82.75 in NY mid-day after the release of a surprise fall in U.S. ADP jobs data, which dropped by 39K versus the forecast of an increase of 24K.

The single currency ratcheted higher in Asia on speculation that the Fed would follow BOJ's further easing measure and price then rose to 1.3881 after the release of stronger-than-expected German factory industrial orders (August m/m figure came in at 3.4%, versus the estimates of 0.9%). Despite euro's strong retreat to 1.3799 in European mid-day on news of downgrade of Ireland to A+ from AA- by Fitch rating agency, renewed buying at 1.3834 lifted euro above 1.3900 to a fresh 8-month high of 1.3949 in NY mid-day.

Although the British pound rose above Tuesday's high of 1.5932 to a fresh 2-month high of 1.5940 in European morning, cable retreated from there to an intra-day low of 1.5833 on talk of sales by a S.E. Asian bank plus cross selling of sterling versus euro and yen. Cable then rebounded in tandem with euro in NY mid-day before trading sideways.

The commodity currencies rose strongly on Wednesday, as the Australian dollar and the New Zealand dollar surged from 0.9694 to 0.9792 and 0.7459 to 0.7549. Usd/cad tumbled from 1.0167 to 1.0063. Usd/chf tanked from 0.9685 to a record low of 0.9599.

Economic data to be released on Thursday include:

Australia Unemployment change, Unemployment rate, Japan Leading indicators, Germany Industrial prod'n, U.K. Industrial prod'n, Manufacturing prod'n, Halifax hse prices, BOE rate decision, BOE Asset Purchase Target , EU ECB rate decision, U.S. Jobless claims, Canada Building permits.

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This article was published on 2010/10/07