Market Review - 03/02/2014 18:16GMT

U.S. dollar tumbles versus Japanese yen after weak US ISM manufacturing data

The greenback tumbled against the Japanese yen after the release of much weaker-than-expected U.S. ISM manufacturing index which dropped to 51.3 in January versus economists' forecast of 56.0 and 56.5 in December. Dollar dropped from 102.41 to as low at 100.77 in New York before stabilizing.

Despite euro's early brief breach of last Friday's low of 1.3479 to a fresh 2-month low at 1.3477, short-covering lifted price and the single currency rebounded briefly to 1.3523 after the release of weak U.S. ISM MFG data and later rose to 1.3536 in thin New York session due to the sell-off in global stock markets.

Dow Jones index nose-dived by more than 300 points whilst UK's FTSE, Germany's DAX and France's CAC closed down by 0.8%, 1.3% and 1.4% respectively. Italy's FTSE MIB and Spain's IBEX tumbled by 2.5% and 1.8% respectively.

The British pound dropped after the release of U.K. Jan manufacturing PMI which came in lower-than-expected at 56.7, previous reading downwardly revised to 57.2. Cable fell sharply fm 1.6449 to 1.6290.

In other news, U.S. Treasury's Lew says "congress should act quickly; unnecessary delays or political posturing could trigger a crisis; U.S. would start missing payments on its obligations 'very soon' after extraordinary measures exhausted; once extraordinary measures exhausted, U.S. cash balance to decline faster than it would at other times of year; administration would exhaust extraordinary measures by end of Feb if debt ceiling not raised."

ECB's Constancio says "bank area front loading preparations for comprehensive assessment; banks with capital shortfall in stress test baseline scenario will have to raise capital in nearer term; capital shortfall from adverse scenario can be dealt with over more extended period."

Tuesday will release of Eurozone PPI, U.S. redbook retail sales, factory orders and durable goods.