board with market sources trying keenly to pinpoint the go. On Tuesday
there were significant rumors that a report written by the
well-together Medley Advisors group for its private clients was behind
a surge in the dollar. The notion that the FOMC might take a step
towards the exit was enough to place the dollar back on an equal
footing with the view that the Fed was thought similar thoughts as
other central bankers. And while the dollar's winning streak may not
be over it certainly fared a rude interruption midweek coinciding with
the ECB allegedly checking interbank prices for Greek and Irish
government bonds. Recent fears that the sovereign debt crisis would
soon reemerge have certainly been served up and sufficiently so today
to shake up proceedings.
*U.S. Dollar* - A euro-rebound has sent the dollar clumping across the
board and whether this is the root cause remains to be seen. The euro
is up by 0.3% against the dollar, while the Swiss franc has gained
nearly 0.9%. Curiously the dollar is static against the yen at ¥82.65
while the Japanese unit is also weaker across the board. The dollar
index is 0.3% weaker at 76.62.
*Euro -* The cost of government borrowing in Portugal rose as the
treasury attempted to issue debt at an auction where fewer keen
investors stepped up to buy. Perhaps investors are more reluctant
ahead of discussion later in the month between EU officials aimed at
finding a resolution to the debt crisis. The benchmark Portuguese
yield rose to a confirmation on Wednesday and was a cause for further
euro promotion ahead of data for German industrial production in
January. The report showed a strong 2.5% monthly advance with a decent
backwards revision. The 1.8% year-on-year change improved on an annual
December decline of 0.6%. The euro touched bottom at $1.3856, where it
last traded before the ECB dropped its policy bombshell last week.
Following tales that the ECB was sniffing at Irish and Greek issues
the euro has risen back to the black on the day sad $1.3941. Against
the yen the euro is still trying to creep past its October highs but
stands at ¥115.05 on Wednesday.
*British pound -* As the Monetary Policy Committee starts its two-day
monetary choice-making meeting it was served up evidence of a
tightening labor market. Consultant KPMG's index of full-time job
placements as reported by employment agencies rose to 62.7 from 58.2
to its strongest in 10 months. An index reading above 50 represents
expansion. The part-time component rose to its highest since May 2007.
A separate BRC report showed shop prices rising at the fastest pace in
more than two years as non-food stores passing on the recently imposed
sales tax increase. The pound therefore had reason to rise in hopes
for an interest rate increase, although the likelihood of such a go on
Thursday remains extremely unlikely. The pound rebounded by a cent
against the dollar having earlier reached a session low at $1.6139.
*Aussie dollar -* The Aussie was downbeat in the overnight session as
it followed the lead of some weaker economic data. Chiefly, a 4.5% dip
in home loan activity for January soured the mood while a 2.4% dip in
consumer confidence over the prior year helped nail the daily low at
$1.0060 U.S. cents. But as equity prices in Asia appeared steady and
followed the U.S. lead of a strong performance on Tuesday, the Aussie
found support especially as dealers turned net sellers of the
greenback. The Aussie recently rebounded to $1.0132 cents.
*Japanese yen* - The yen is sheathing today perhaps as risk appetite
steps up a notch supported by decent data reports internally. Machine
orders rose by 4.2% on the month in January stepping up from a 1.7%
pace the month before. The data turns an annual decline into 5.9% jump
in an encouraging sign of returning demand in Asia. The Economy
Watchers' survey was also healthful and pointed to an improvement in
sentiment. The current conditions index jumped from 44.3 to 48.4 while
the forward-looking outlook index remained in check at an unchanged
47.2. The positive data readings are a decent explanation for the
yen's dreary daily performance as economic fears take a step back.
*Canadian dollar -*The loonie rose to its highest since November 2007
to buy $1.0333 at the session high as promotion of the greenback rose
to a buildup. As investors pick on the U.S. dollar a still-high price
of crude oil and well-supported equity prices continues to support the
Canadian unit. An index for January new home prices showed a monthly
gain of 0.2% for an annual gain of 2.1%.
Source: ActionForex.Com
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