Market Review - 20/01/2014 22:53GMT

Euro recovers from a fresh 7-week low in subdued trade

The single currency recovered from a fresh 7-week low against the dollar as investors closed their bet in subdued trade Monday due to closure of U.S. financial markets for Martin Luther King Day holiday.

Earlier in the day, although euro remained under renewed selling presure at 1.3546 at Monday's Australian open following last Friday's selloff and fell further to a fresh 7-week low of 1.3508 versus the dollar at Asian open, lack of follow- through selling prompted short covering and price later rebounded to 1.3562 in European morning due partly to cross-selling of euro and then edhed marginally higher 1.3568 near European closing before easing.

Versus the Japanese yen, dollar was under pressure in Asian trading on the back of falling Nikkei 225 index and price tanked to 103.86 before staging a rebound, dollar climbed back to 104.26 but renewed cross-buying of yen capped intra-day gain there and the pair later dropped back to 103.92 n then traded sideways for rest of the quiet North American session session.

Cable followed euro's move closely in Asia and fell to 1.6396 before climbing back to 1.6452 in European morning, however, renewed selling ahead of last Friday's high of 1.6459 capped intra-day gain and price later retreated to 1.6418 due partly to cross-selling of sterling before moving sideways.

On the data front, report showed that industrial production in Japan fell unexpectedly in November to a seasonally adjusted -0.1%, from 0.1% in the preceding month. A separate report stated that capacity utilization in Japan slipped by seasonally adjusted 0.5 percent month-on-month in November, compared to previous year, capacity utilization fell 2.8 percent.

In commodity currency, although Australian dollar fell initially to a fresh 3-1/2 year low of 0.8756 against the usd in Asian morning, the pair found support after data showed China's economy grew 7.7% on a year-over-year basis in the fourth quarter and rebounded to 0.8821 in European afternoon before easing.

Data to be release on Tuesday:

New Zealand CPI, Germany ZEW survey current situation, survey expectations, U.K. CBI industrial trend, Canada wholesale sales, and U.S. IMF economic outlook.