The greenback extended it's weekly losses against high-yielding currencies on Wednesday as hopes on global recovery remained and investors kept buying riskier assets. The better-than-expected earnings report from JP Morgan gave a boost to global stock markets and Dow Jones Index finally climbed above 10,000 level for the first time since October 2008. Fed minutes in September stated that policy-makers discussed last month about the importance of retaining the flexibility to increase or scale back their asset purchases if the economic outlook changed. The committee also felt economic outlook has improved but activity was still quite weak.
The single currency penetrated Tuesday's high of 1.4876 in Asian morning on renewed broad-based selling in dollar and edged to 1.4921 in European session. Despite subsequent retreat to around 1.4874 on profit-taking, euro rose again in part after the release of U.S. retail sales data, which turned out to be not as weak as expected (sales fell 1.5% in September compared to the consensus forecast of a 2.1% decline) and price reached another fresh year high of 1.4948 before retreating in late U.S. session.
Cable traded with a firm undertone in Asia on dollar's weakness and rose to 1.6026 after the ILO unemployment remained at 7.9% (economists expected a tick higher to 8.0%) and average earnings increased by 1.6% (better than forecast of 1.4%). Although price subsequently retreated from there to 1.5920, buying interest emerged and sterling traded sideways in the rest of the day.
Bank of Japan kept interest rate unchanged at 0.10% as widely expected and upgraded its view on Japanese economy, saying it was recovering. Dollar-yen initially fell to 88.83 on speculation that BOJ would refrain fm intervening to curb the yen's strength. Although price rebounded strongly to 89.90 on bargain hunting and short-covering, renewed selling on dollar pressured the pair again and retreated to 89.00 before trading sideways in U.S. afternoon.
Economic data to be released on Wednesday:
New Zealand CPI, Japan industrial production, capacity utilisation, Switzerland ZEW index, eurozone HICP, U.S. CPI, jobless claims, empire state index, Philadelphia Fed survey.