Acetrader-Daily Market Outlook 22-10-2010

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Market Review - 21/10/2010 23:03 GMT

Dollar rises broadly on profit-taking before G-20 meeting

The U.S. dollar rose across the board on Thursday as investors became cautious ahead of the Group of 20 meeting in South Korea this weekend.

The greenback rose briefly but strongly to 81.84 against the Japanese yen after comments from U.S. Treasury Secretary Timothy Geithner, however, dollar quickly relinquished its gain and ratcheted lower to 80.91 in European morning. The greenback then staged a recovery and edged higher to 81.38 in NY afternoon on dollar's broad-based rebound.

U.S. Treasury Secretary Timothy Geithner said he wanted G20 countries to move toward 'norms' on exchange rate policy and would work to persuade fellow finance leaders that the US was not deliberately devaluing the dollar.

The single currency dropped briefly to 1.3872 in Asian morning after dollar-positive comments from U.S. Treasury Secretary Timothy Geithner. Although buying interest there lifted euro up and the pair rallied to 1.4051 in Europe after the release of stronger-than-expected German PMI for manufacturing and services sectors (which came in at 56.1 and 56.6 in October, versus the forecast of 54.8 and 54.6, respectively), euro fell sharply to 1.3904 in NY afternoon on profit-taking together with dollar's broad-based rebound.

The British pound dropped briefly from 1.5850 to 1.5791 in Asian morning on comments from U.S. Treasury Secretary Timothy Geithner and fell to 1.5728 in European morning. Cable extended its weakness after the release of weaker-than-expected U.K. retail sales data (which came in at -0.2 m/m and 0.5% y/y in September, versus the expectations of 0.4% m/m and 1.0% y/y) and reached an intra-day low of 1.5687 in NY afternoon.

The 2-day meeting of G20 will start on Friday and the exchange rate disagreements among the countries will be focused.

Economic data to be released on Friday include:

Australia Import prices, Export prices, Germany Ifo index, Canada CPI, CPI core, Retail sales, ex. Autos.

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This article was published on 2010/10/22