Market Rerview - 08/12/2011 22:26 All times in GMT
Euro falls below 1.3300 after ECB's Draghi doesn't signal more bond-buying
The single currency tumbled sharply in New York session on Thursday and fell below 1.3300 after European Central Bank's President Mario Draghi dashed hopes of increasing ECB's bond-buying of debt-ridden eurozone countries. Market will pay attention to the second day of the EU summit starting at 09:30GMT today and the press conference will hold at 14:00GMT.
Although the single currency traded sideways in Asia and eased to 1.3379 in European morning after a senior eurozone official ruled out the possibility of giving the EFSF a banking license, euro climbed higher and hit an intra-day high at 1.3460 in early New York Morning after the European Central Bank cut interest rates by 25 basis points before tumbling sharply to 1.3289 in New York afternoon after ECB President Mario Draghi dampened hopes that ECB would expand it's bond purchases to stem the region's debt crisis.
Later in New York, euro briefly pared intra-day losses to 1.3374 after the release of EU summit draft, which said EU leaders are determined to strengthen bailout mechanisms to tackle the eurozone debt crisis but Germany's rejection on EU summit draft measures capped euro's upside.
ECB President Mario Draghi said during the ECB news conference in Frankfurt that 'rate cut decision was not unanimous; did not consider cutting rate more; government bond purchases for transmission of monetary policy, not infinite; do not want to circumvent EU treaty; treaty says no monetary financing to government; if national central banks want to lend to IMF and IMF then use money to buy bonds in euro area we think it's not compatible with treaty.'
ECB cuts benchmark interest rate by 25 basis points from 1.25% to 1.00% as expected.
The British pound remained firm after Bank of England kept interest rates on hold and made no change to its asset purchase program before rising briefly but sharply to an intra-day high at 1.5770 in tandem with euro in early New York morning. Cable later tanked to a session low at 1.5610 after Draghi's comments before stabilising around 1.5650 ahead of New York close.
The Bank of England kept its interest rate and Asset purchase program unchanged at 0.5% and 275 billion sterling respectively.
Versus the yen, although the greenback fell to an intra-day low at 77.13 in early New York morning on dollar's broad-based weakness, price rebounded to a session high at 77.79 on greenback's broad-based firmness after Draghi's comments dampened risk appetite.
Euro cross pairs also fell in New York morning on reaction to ECB Draghi's comments, EUR/GBP tumbled from 0.8552 to a 1-month low at 0.8496 and EUR/JPY fell from 104.20 to 103.00.
In other news, EU summit draft conclusions stated 'EU leaders determined to preserve integrity of EU; EU leaders determined to move towards new fiscal compact; EU leaders determined to strengthen bail-out mechanisms to tackle immediate debt crisis challenges; existing EFSF bailout fund to remain active until mid-2013; permanent European stability mechanism to have maximum lending capacity of 500 bln euros; ESM bailout fund to be given the possibility to directly recapitalise banks; ESM bailout fund to be given banking license.' Later a senior German government official said 'Germany rejects draft measures including banking license for ESM, simultaneous running of EFSF and ESM, common eurozone debt issuance.'
On the data front, U.S. initial jobless claims fall to 381K from 404K previously. Japan's current account was reported at 562.4 billion yen vs forecast of 500 billion yen and economic watch was 45.0.
Data to be released on Friday:
Japan GDP, Germany CPI final, HICP final, trade balance, exports, imports, UK PPI, trade balance, Canada trade balance, exports, imports, U.S. trade balance, University of Michigan consumer sentiment.
Euro falls below 1.3300 after ECB's Draghi doesn't signal more bond-buying
The single currency tumbled sharply in New York session on Thursday and fell below 1.3300 after European Central Bank's President Mario Draghi dashed hopes of increasing ECB's bond-buying of debt-ridden eurozone countries. Market will pay attention to the second day of the EU summit starting at 09:30GMT today and the press conference will hold at 14:00GMT.
Although the single currency traded sideways in Asia and eased to 1.3379 in European morning after a senior eurozone official ruled out the possibility of giving the EFSF a banking license, euro climbed higher and hit an intra-day high at 1.3460 in early New York Morning after the European Central Bank cut interest rates by 25 basis points before tumbling sharply to 1.3289 in New York afternoon after ECB President Mario Draghi dampened hopes that ECB would expand it's bond purchases to stem the region's debt crisis.
Later in New York, euro briefly pared intra-day losses to 1.3374 after the release of EU summit draft, which said EU leaders are determined to strengthen bailout mechanisms to tackle the eurozone debt crisis but Germany's rejection on EU summit draft measures capped euro's upside.
ECB President Mario Draghi said during the ECB news conference in Frankfurt that 'rate cut decision was not unanimous; did not consider cutting rate more; government bond purchases for transmission of monetary policy, not infinite; do not want to circumvent EU treaty; treaty says no monetary financing to government; if national central banks want to lend to IMF and IMF then use money to buy bonds in euro area we think it's not compatible with treaty.'
ECB cuts benchmark interest rate by 25 basis points from 1.25% to 1.00% as expected.
The British pound remained firm after Bank of England kept interest rates on hold and made no change to its asset purchase program before rising briefly but sharply to an intra-day high at 1.5770 in tandem with euro in early New York morning. Cable later tanked to a session low at 1.5610 after Draghi's comments before stabilising around 1.5650 ahead of New York close.
The Bank of England kept its interest rate and Asset purchase program unchanged at 0.5% and 275 billion sterling respectively.
Versus the yen, although the greenback fell to an intra-day low at 77.13 in early New York morning on dollar's broad-based weakness, price rebounded to a session high at 77.79 on greenback's broad-based firmness after Draghi's comments dampened risk appetite.
Euro cross pairs also fell in New York morning on reaction to ECB Draghi's comments, EUR/GBP tumbled from 0.8552 to a 1-month low at 0.8496 and EUR/JPY fell from 104.20 to 103.00.
In other news, EU summit draft conclusions stated 'EU leaders determined to preserve integrity of EU; EU leaders determined to move towards new fiscal compact; EU leaders determined to strengthen bail-out mechanisms to tackle immediate debt crisis challenges; existing EFSF bailout fund to remain active until mid-2013; permanent European stability mechanism to have maximum lending capacity of 500 bln euros; ESM bailout fund to be given the possibility to directly recapitalise banks; ESM bailout fund to be given banking license.' Later a senior German government official said 'Germany rejects draft measures including banking license for ESM, simultaneous running of EFSF and ESM, common eurozone debt issuance.'
On the data front, U.S. initial jobless claims fall to 381K from 404K previously. Japan's current account was reported at 562.4 billion yen vs forecast of 500 billion yen and economic watch was 45.0.
Data to be released on Friday:
Japan GDP, Germany CPI final, HICP final, trade balance, exports, imports, UK PPI, trade balance, Canada trade balance, exports, imports, U.S. trade balance, University of Michigan consumer sentiment.