Thread: Market Review - 05/01/2012

Market Review - 05/01/2012 21:53 All times in GMT

Euro falls below 1.2800 on renewed eurozone debt concerns

The single currency tumbled against the dollar on Thursday and fell below 1.2800 for the first time since September 2010 on renewed concerns about the eurozone debt crisis.

Although the single currency traded narrowly in Asia and edged higher to an intra-day high at 1.2944 in European morning, euro penetrated last week's 15-month low at 1.2858 on broad-based selling of euro after French borrowing costs rose at an auction and as UniCredit SpA share offer yesterday fuelled concern about the sovereign-debt crisis. Later, euro dropped below 1.2800 in New York morning as strong U.S. jobs data strengthened the dollar and fell to a fresh 15-month low at 1.2770 near New York close.

France's OAT bond auction sold a total of 7.963 billion euros with a target of 7-8 billion. The 10-year bonds had an average yield of 3.29%, up from 3.18%.

U.S. ADP employment was much better-than-expected at 325K vs a market expectation of 178K while jobless claims fell to 372K from a previous revised figure of 387K.

The British pound edged higher to an intra-day high at 1.5629 in European morning before tumbling in tandem with euro to a session low at 1.5466 in New York morning. However, cable recovered to 1.5502 before retreating to 1.5480 near New York close.

Versus the Japanese yen, the greenback rose from an intra-day low at 76.66 in Asian morning to a session high at 77.25 in New York afternoon on dollar's broad-based strength as U.S. jobs market strengthened.

On the data front, UK services PMI (Dec) was much better-than-expected, rising from 52.1 to 54.0 vs a consensus forecast of a decline to 51.5. U.S. ISM non-manufacturing for Dec was 52.6, higher than previous 52.0 but lower than market consensus of 53.0.

Data to be released on Friday includes:

Swiss CPI, EU retail sales, business climate, economic sentiment, consumer sentiment, unemployment rate, Germany factory orders, Canada unemployment rate, U.S. non-farm payrolls, private payrolls, unemployment rate, average hourly earnings.

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