Acetrader-Daily Market Outlook 29-10-2010

Acetrader-Daily Market Outlook 29-10-2010

Market Review - 28/10/2010 22:49 GMT

Dollar drops broadly on Fed easing speculation

The greenback weakened against major currencies on Thursday as investors speculated U.S. Fed would devaluate the greenback by further monetary easing.

The greenback fell against the Japanese yen from 81.78 in Australia on Thursday. Dollar tumbled in Asian and European sessions and sank below 81.00 to 80.86 in NY morning before staging a recovery. Earlier in Asia, BOJ kept overnight call rate target unchanged at 0-0.10%. BOJ would buy corporate bonds rated BBB or higher and commercial paper rated a2 or higher under new asset purchase programme. BOJ also kept size of asset purchase unchanged.

The single currency rose from 1.3764 on short-covering following Wednesday's selloff to 1.3734 and surged to 1.3853 in European morning on Thursday. Later, euro strengthened again after minor retreat and extended its rally on improved risk appetites after the release of U.S. jobless claims data (which came in at 434,000 versus the economists' forecast of 453,000 and well below previous week's upwardly revised reading of 455,000). The single currency eventually climbed to an intra-day high of 1.3946 in NY morning.

The British pound edged higher on short-covering in tandem with euro after Wednesday's decline to 1.5731 and rose to 1.5830 in Asian mid-day. Later, despite cable's brief retreat to 1.5762 after the release of weaker-than-expected U.K. national house prices for October (which came in at -0.7% m/m and 1.4% y/y, versus the expectations of -0.4% m/m and 2.3% y/y), sterling rebounded and extended its rally after the release of U.K. CBI distribution trade data (which came in at 36 in October from September's six year high of 49, versus the forecast of 35). Cable rose to 1.5979 in NY morning before trading sideways.

Economic data to be released on Friday include:

New Zealand Trade balance (nzd), Imports, Exports, Gfk survey, Japan Manufacturing PMI, National CPI (core), National CPI, Tokyo CPI, Unemployment rate, Household spending, Industrial prod'n, Housing starts, Construction orders, U.K. Mortgage Approval, EU HICP flash , Unemployment rate, Swiss KOF indicator, U.S. GDP deflator, GDP annualised, Personal consumption, PCE core, Chicago PMI, U. Michigan survey Final, Canada GDP, PPI.

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