Market Review - 04/02/2014 18:25GMT

U.S. dollar rises versus Japanese yen as stock markets rebound

U.S. dollar fell initially against the Japanese yen to a fresh 10-week low at 100.76 in Asia as Nikkei-225 plunged by more than 4%, however, investors bought back U.S. dollar as global stock markets pared most of early losses.

Britain's FTSE 100 n Germany's DAX closed down by 0.2% n 0.6% respectively whilst France's CAC-40 closed up by 0.3%. Dow Jones index traded in +ve territory and rose by around 87 points to 15460 in NY midday. U.S. dollar rebounded strongly to 101.67 in New York.

The single currency traded inside a relatively narrow range of 1.3494-1.3539 as focus was on other currency pairs. The British pound rallied against the U.S. dollar from 1.6257 to 1.6353 after the release of much stronger-than-expected UK construction PMI.

The Australian dollar surged from 0.8730 to 0.8943, more than 2%, on Tuesday after Reserve Bank of Australia (RBA) dropped its easing bias toward interest rates and toned down its long-term call for the currency to weaken. New Zealand also rallied strongly from 0.8052 to as high as 0.8227.

In other news, Fed's Evan said there is uncertainty about sustainable rate of unemployment; believe 5-5.25% is attainable; a strongly growing economy will address many of the problems in the job market; Fed will eventually allow assets to roll off balance sheet during exit from super-easy policy; Fed's balance sheet will eventually be well south of $4 trln, but will be bigger than pre-crisis; Yellen will continue to improve Fed's communications, transparency; current pace of taper is a 'reasonable', 'modest' pace; took longer than expected for QE3 to kick in to jump start.

Wednesday will see the release of Germany's, Britain's and Eurozone PMI respectively; Eurozone retail sales; U.S. ADP employment and ISM non-manufacturing data.