Market Review - 22/05/2014 22:41GMT

The greenback strengthens broadly after upbeat U.S. data

The greenback turned broadly higher against the other major currencies on Thursday as positive U.S. data showed that U.S. jobless claims near the lowest level since 2007 last week, while manufacturing sector expanded at a faster rate than expected this month and housing market was also regaining momentum.

Versus the yen, dollar rose above Wednesday's high of 101.63 to 101.76 in Asia as data showed that Chinese manufacturing activity improved in May and dampened safe haven demand for the Japanese currency. Later, cross-buying in yen pressured price to 101.47 in Europe before rising to a fresh session high of 101.82 in New York afternoon after the positive U.S. economic reports.

The preliminary reading of China's HSBC manufacturing index rose to a five month high of 49.7 this month.

U.S. Labor Department showed that the number of people filing for initial jobless benefits last week increased by 28,000 to 326,000 from the previous week's revised total of 298,000, which was the lowest reading since May 2007. In a separate report, Markit said that its preliminary U.S. manufacturing index rose to 56.2 this month from a final reading of 55.4 in April, and ahead of expectations of 55.5.

The National Association of Realtors said U.S. existing home sales increased 1.3% in April to an annual rate of 4.65 million units. Although the data came in worse than expected of a rise 2.2% to 4.69 million last month, the increase indicated that the housing market is regaining momentum.

The single currency ended the day lower on Thursday due to renewed broad-based strength in greenback. During the day, although euro rebounded from 1.3654 to 1.3688 (also Wednesday's New York high) in European morning as data showed that the recovery in the euro zone private sector continued in May, failure to penetrate this resistance and renewed broad-based rebound in dollar knocked euro down to a fresh session low at 1.3645 in New York afternoon.

The euro zone flash manufacturing purchasing managers' index slid to 52.5 this month, from 53.4 in April. The bloc's services PMI rose to a 35-month high of 53.5 up from 53.1 in April. Analysts had expected the index to tick down to 53.0. Earlier, data showed Germany's manufacturing PMI slid to 52.9 from 54.1 in April, while the services PMI improved to 56.4 from 54.7 last month.

Cable went through a mini 'roller-coaster' session on Thursday as despite a brief jump to 1.6917 in European morning, release of unchanged U.K. Q1 disappointed the market and price swiftly tanked to 1.6862 and then lower to 1.6852 in New York.

The Office for National Statistics confirmed that U.K. gross domestic product grew 0.8% in the first quarter, unchanged from its preliminary estimate and in line with forecasts. The annual rate of growth was unchanged at 3.1%.

Data to be released on Friday :


New Zealand ANZ consumer confidence, Germany GDP, exports, imports, Ifo business climate, Ifo current assessment, Ifo expectations, Italy retail sales, Canada CPI, U.S. new home sales.