One Stop Centre of Financial Market Trading blog

Previous session overview

Comments from U.S. Treasury Secretary Timothy Geithner lent the dollar a helping hand against the euro and yen Thursday in Asia, but dealers said the boost would likely prove short-lived amid continued expectations for more monetary easing by the Federal Reserve.

The dollar rose in morning trade in Tokyo following an interview in The Wall Street Journal with Geithner in which he said he believes major currencies are "roughly in alignment now," suggesting he sees no need for further dollar falls against the euro and yen.

The U.S. unit touched an intraday high of JPY81.84 following the remarks, while the euro sank against the greenback to USD1.3872.

At 0450 GMT, the dollar was at JPY81.20, up from JPY81.16 late Wednesday in New York. The euro traded hands at USD1.3916, compared with USD1.3949. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the euro, was up at 77.392 from 77.212.

The British pound stripped gains against the dollar and weakened vs. the euro after the UK government announced detailed public spending cuts. Finance Minister George Osborne announced that the government aims to cut half a million public sector jobs, raise the retirement age to reach 66 by 2020 and introduce a permanent levy on banks.

The Australian dollar was higher late in Asia on Thursday in choppy trade as the main focus was on remarks by U.S. Treasury Secretary Timothy Geithner that suggested he sees no need for the U.S. dollar to sink more than it already has against the euro and yen.

Market expectation

The dollar may fall to JPY80.80 by the end of the global day, refreshing the new 15-year low it marked Wednesday at JPY80.84, analysts said. In coming trading sessions, the currency could even drop to a new post-war low below JPY79.75, they said.

Traders say the overall bearish-dollar trend isn't likely to reverse over the short term. They said the dollar won't sustain any gains against the yen. It's not as if the U.S. is going to intervene in the currency market to weaken the dollar.

Sterling is a bit lower against the dollar but slightly higher versus the euro. Prospects for more quantitative easing at some point by the Bank of England are likely to cap the pound's upside. Ever changing risk sentiment is likely to keep sterling in ranges.

European stock markets are expected to open little changed Thursday, with market participants looking to the slew of corporate earnings and economic data expected during the session before building further positions.

Oct 21	Count.	Event	For	Unit	Imp.	Act.	Cons.	Prev.
00:00	US	Federal Reserve Bank of St. Louis President Bullard speaks on "Frictions in Financial and Labour Markets" at an Economic Policy Conference
00:00	WLD	G-20 FinMins meet (21st-23rd Oct)
00:00	WLD	G-20 Deputy FinMins and Deputy Central Bank Governors meet
02:00	NZ	Credit Card Statistics	Sep	% m/m (sa)		0.9		0.5
02:00	NZ	Westpac Consumer Confidence	Oct	index
02:00	NZ	ANZ Consumer Confidence	Oct	index		113.6		116.4
04:30	JP	METI All industry Activity	Aug	% m/m			-0.4	1
06:58	FR	Flash Manufacturing PMI	Oct	index			55.5	56
06:58	FR	Flash Services PMI	Oct	index			57.5	58.2
07:00	CH	SNB monthly statistical bulletin
07:30	NL	Unemployment (sa)	Sep	% rate			5.3	5.3
07:30	DK	Consumer Sentiment	Oct	Index			1.8	2.3
09:00	CH	Credit Suisse ZEW Survey	Oct	Survey				-5.1
09:15	GB	BoE member Posen speaks at the Austrian National Bank
11:45	EU	ECB hold non-rate setting meeting
12:30	US	Initial Claims	16-Oct	k			455	462
12:30	CA	Leading indicator	Sep	% m/m			0.2	0.5
14:00	US	Leading Indicators	Sept	% m/m			0.3	0.3
14:00	US	Philadelphia Fed Survey	Oct	index			2	-0.7
14:00	EU	EC Flash Consumer Sentiment	Oct	index			-11	-11
14:30	CA	Business Outlook Future Sales	Q3	index				25