2013-03-01 14:51:41 European Session – Risk aversion weighs on euro and sterling
March 1, 2013 2:51 pm
The biggest mover of the European Session on Friday was the British pound which tumbled after disappointing UK manufacturing data. The Manufacturing Purchasing Managers’ Index (PMI) showed a drop to 47.9 from a downwardly revised 50.5 in January, which surprised markets as forecast was for a rise to 51.00. The 50 point level demarcates expansion from contraction.
As a result, GBPUSD tumbled to a new 2-1/2 year low of $1.5011, the lowest level since July 2010.
The UK data which instigated risk aversion in currency markets dragged down the euro as well. EURUSD fell to a low of $1.2986, the lowest since December.
Meanwhile markets are generally risk off as the so-called budget sequestration kicks in after US lawmakers failed to avoid $85 billion in federal spending cuts this year.
Risk aversion boosted the dollar, which has gained ground against most major counterparts today and sent the Dollar Index to a new 6-month high.
Dollar is up over half a percent against the Swiss franc. USDCHF surged to a high of 0.9421, the highest since November 2012.
Yen is also weak, down 0.4 percent after CPI data today highlighted Japan’s battle with deflation. Also new nominee for governor of Bank of Japan, Haruhiko Kuroda’s confirmation hearings are scheduled for Monday. Kuroda is seen to be more favourable on bolder monetary easing measures which could weaken yen further.
USDJPY edged up to a high of 93.01, slightly higher than yesterday.
Focus will be on ISM data late in the US session, which could be a big market mover as well as this evening’s speech by Federal Reserve Chairman Ben Bernanke.
The biggest mover of the European Session on Friday was the British pound which tumbled after disappointing UK manufacturing data. The Manufacturing Purchasing Managers’ Index (PMI) showed a drop to 47.9 from a downwardly revised 50.5 in January, which surprised markets as forecast was for a rise to 51.00. The 50 point level demarcates expansion from contraction.
As a result, GBPUSD tumbled to a new 2-1/2 year low of $1.5011, the lowest level since July 2010.
The UK data which instigated risk aversion in currency markets dragged down the euro as well. EURUSD fell to a low of $1.2986, the lowest since December.
Meanwhile markets are generally risk off as the so-called budget sequestration kicks in after US lawmakers failed to avoid $85 billion in federal spending cuts this year.
Risk aversion boosted the dollar, which has gained ground against most major counterparts today and sent the Dollar Index to a new 6-month high.
Dollar is up over half a percent against the Swiss franc. USDCHF surged to a high of 0.9421, the highest since November 2012.
Yen is also weak, down 0.4 percent after CPI data today highlighted Japan’s battle with deflation. Also new nominee for governor of Bank of Japan, Haruhiko Kuroda’s confirmation hearings are scheduled for Monday. Kuroda is seen to be more favourable on bolder monetary easing measures which could weaken yen further.
USDJPY edged up to a high of 93.01, slightly higher than yesterday.
Focus will be on ISM data late in the US session, which could be a big market mover as well as this evening’s speech by Federal Reserve Chairman Ben Bernanke.
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