Market Review - 22/06/2013 00:44GMT

Dollar rises on QE withdrawal expectation

The greenback strengthened broadly on Friday due to expectation that the Federal Reserve will reduce its monetary easing by the end of this year. The single currency came under further pressure on renewed political uncertainty in Greece as Greece's small Democratic Left party decided to pull its ministers from the three-party ruling coalition.

Despite euro's brief rise to 1.3255 in European morning, price fell below Thursday's low at 1.5415 in New York morning due to the renewed political turmoil in Greece together with the expectation of QE withdrawal in U.S.. Price eventually hit session low at 1.3098 at New York midday before staging a recovery to 1.3159 on weekend short-covering.

Although the British pound staged a recovery from Thursday's low at 1.5415 to 1.5531 in European morning, the pair fell sharply in tandem with euro and then pierced through 1.5415 support to a low of 1.5368 in New York morning but rebounded strongly to 1.5456 in U.S. afternoon.

Versus the Japanese yen, although the greenback staged a strong rebound from Australian low at 96.87 to 98.13 in European morning on active cross selling of yen versus other currencies, offers at Thursday's top at 98.29 capped its upside and price retreated to 97.27. Later, despite dollar's brief fall to 97.33 in New York morning, price staged a rebound to 97.99 at New York before stabilising.

In other news, Fed's Bullard said in a statement 'felt Fed should have more strongly signaled willingness to defend inflation target; also felt FOMC decision to lay out a more elaborate plan to reduce pace of bond purchases was "inappropriately timed"; felt more prudent for FOMC to wait for clearer signs U.S. economy strengthening and inflation moving toward Fed target before making tapering announcement.' EU's Rehn said 'important to stabilize Greece political situation; important Greece review to be completed in July.'

On the data front, U.K. PSNCR in May came in at 3.1B, versus the forecast of -2.5B, previous reading was revised to -11.0B. U.K. public sector net borrowing in May was released at 10.5B, versus the expectation of 13.75B, previous reading was revised to 6.6B.

Data to be released next week :

German Ifo business climate, current assessment, Italy consumer confidence, U.S. Chicago Fed index on Monday.

France business climate, EU retail sales, US. Durable goods, retail sales, house price index, consumer confidence, new home sales on Tuesday.

Germany Gfk consumer confidence, Swiss UBS consumption indicator, France GDP, U.K. CBI distributives trades, U.S. GDP, personal consumption, PCE core on Wednesday.

New Zealand, trade balance, import, export, Japan all industry index, France consumer confidence, U.K. current account, GDP, EU economic sentiment, business climate, consumer confidence, U.S. personal income, personal spending, PCE index, PCE core, jobless claims, pending home sales on Thursday.

Japan unemployment rate, CPI, industrial production, retail sales, housing starts, construction orders, U.K. consumer confidence, France PPI, Italy, HICP, PPI, Swiss KOF indicator, Germany CPI, HICP, Canada GDP, PPI, U.S. Chicago PMI, University of Michigan consumer confidence on Friday.