Acetrader-Daily Market Outlook 26-10-2010

Acetrader-Daily Market Outlook 26-10-2010

Market Review - 25/10/2010 22:48 GMT

Dollar sinks to a fresh 15-year low against yen after G-20 meeting

The greenback tumbled to a fresh 15-year low against the Japanese yen on Monday as investors prepared for additional monetary easing by U.S. Fed despite the announcement of avoiding 'competitive devaluations' in G-20 meeting.

Although the greenback rose briefly to 81.46 in Australian morning following weekend's G-20 meeting, selling interest there sent dollar lower and dollar tumbled below 80.84 to a fresh 15-year low of 80.41 in European morning, as traders interpreted one of the G-20 communique which had called for countries to avoid 'competitive devaluations' that BOJ might be refrained from further currency intervention. Dollar then staged a recovery to 80.89 in NY afternoon on short-covering.

The single currency rose initially following weekend's G-20 meeting and rallied to an intra-day high of 1.4080 as 'market anxiety on G-20 proved unwarranted'. However, euro retreated on profit-taking and fell sharply below 1.4000 after the release of higher-than-expected U.S. existing home sales ( which rose by 10% to 4.53 million versus the forecasts of a rise of 4.0% to 4.3 million). Euro eventually dropped to 1.3952 in NY afternoon before stabilising.

The British pound rose in tandem with euro and climbed to an intra-day high of 1.5773. Later, although cable weakened to 1.5705 on profit-taking, sterling rebounded to 1.5770 partly due to active cross buying in sterling versus euro (eur/gbp dropped from 0.8942 to 0.8864) and then retreated in NY afternoon.

Economic data to be released on Tuesday include:

Japan CSPI, Australia NAB business confidence, Germany Gfk index, Import Price, U.K. GDP, U.S. Consumer confidence, Home Price.

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