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Hong Kong AceTrader  01:27:58 GMT - 03/06/2014  

Market Review - 05/03/2014 21:16GMT

Japanese yen extends weakness on increasing risk appetite

The Japanese yen weakened broadly the second day on Wednesday as concerns over tensions between Russian and Ukraine continued to abate. Investors shrugged off weaker than expected data on U.S. private sector jobs growth and turned their focus on Thursday's monetary policy decision from Bank of England and European Central Bank.

Versus the Japanese yen, dollar rebounded after finding support at 102.12 in Wednesday's Asian trading and price later rose above Tuesday's high of 102.29 in European morning. Usd/jpy pair later climbed higher to 102.55 in New York morning before easing. Eur/jpy, aud/jpy and gbp/jpy crosses rose from 140.20 to 140.78, from 91.35 to 92.08 and from 170.15 to 171.40 on Wednesday respectively.

Euro remained under pressure after meeting renewed selling at 1.3745 in Australian session and despite release of upbeat reports on euro zone private sector activity and retail sales, the single currency fell below Tuesday low at 1.3718 to 1.3707 in European morning as investors remained cautious ahead of the ECB's monthly policy meeting on Thursday amid concerns that the bank could tighten monetary policy to help shore up the fragile recovery in the region. Later, euro traded in a choppy fashion inside 1.3707-1.3749 in New York session, ended around 1.3732 near New York closing.

On the data front, the final euro zone composite PMI was revised up to a 32-month high of 53.3 from a preliminary estimate of 52.7. The euro area services PMI rose 52.6 in February, from a final reading of 51.6 in January and higher than the flash estimate of 51.7. Meanwhile, Germany's composite PMI climbed to a 33-month high but France's fell to a two-month low of 47.7. Italy's service PMI soared to an almost three year high last month at 52.9.

Cable traded sideways above Tuesday's low at 1.6652 in Asian on Wednesday before active cross-buying of sterling versus yen and euro pushed price higher in Europe. The pair rose to 1.3734 in New York morning and then further to 1.6742 before easing in New York afternoon.

Bank of Canada (BoC) kept rate unchanged at 1.00% on Wednesday, repeated that timing and direction of next rate move to depend on how new data influence balance of risks. BoC said in the statement that 'with inflation expected to be well below target for some time, downside risks to inflation "remain important" roughly follow path outlined in January MPR; recent inflation readings slightly higher than expected; still expects underlying 2014 Canada growth of around 2-1/2%, Q1 2014 likely to be softer; risks associated with elevated household imbalances have not materially changed; exports a little stronger than previously thought but continue to underperform, overall business investment has yet to pick up; recent data support bank's expectation of soft landing in housing market, stabilizing debt-to-income ratios for households; fundamental drivers of growth and inflation in Canada continue to strengthen gradually, as expected; global economy evolving as anticipated, growth seen strengthen in 2014/2015; tensions in Ukraine have added to geopolitical uncertainty.' However, BoC statement did not mention of C$; in Jan it said weaker C$ should help boost exports, confidence and investment.

In other news, Fed Chair Janet Yellen said "the economy continues to operate considerably short of these objectives of maximum employment and stable prices; the economy is stronger and the financial system is sounder; we have come a long way, but we have farther to go."

Data to be release of Thursday:

Australia trade balance, retail sales, Germany factory orders, UK BoE rate decision, ECB rate decision, Canada building permits, U.S. labor cost, productivity, initial jobless claims and factory orders.

Actionable trading levels delivered LIVE to YOUR charts

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 27 May 2019
AAGB/US- Holiday
Tue 28 May 2019
A 14:00 US- Consumer Confidence
C 13:00 US- Case-Shiller
Wed 29 May 2019
A 08:55 DE- Employment
AA 18:00 US- BOC Decision
A 18:30 US- EIA Crude
Thu 30 Mar 2019
AAEZ/CH- Holiday
A 12:30 US- Weekly Jobless
Fri 31 Mar 2019
AA 10:00 EZ- Flash HICP
A 12:30 US- Personal Income, Spending, Deflator
AA 14:00 US- Final Univ of Michigan

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