Tuesday, August 23, 2011

Market Morning Overview - August 23, 2011

Previous session overview
Improvement in a gauge of Chinese manufacturing coaxed risk-sensitive currencies, such as the Australian dollar and the euro, higher against rivals in Asia Tuesday, with any strength in European economic data later likely to extend the gains. 

The dollar was nearly flat against the yen. Investors avoided major bets on the greenback ahead of a U.S. Federal Reserve symposium starting Friday in Jackson Hole, Wyo. They were also cautious about the yen as Japan's Finance Minister Yoshihiko Noda kept intervention concerns alive by saying he would step up vigilance on the market. 

The euro and British pound are trading slightly higher against the U.S. dollar, which is flat against the yen, as investors turn their attention to data pending more euro-zone debt news.

At 0450 GMT, the euro was at USD1.4370 from USD1.4358 late Monday in New York, and at JPY110.36 from JPY110.25. 

The dollar was at JPY76.80, compared with JPY76.79. The ICE Dollar Index was at 74.077 from 74.009. 

GBPUSD remained buoyant as the EURUSD rally helped support on a dips. Resistance at USD1.6600 proved strong and the market fell back into the close.

The Australian dollar pushed higher Tuesday, lifted by a better-than-expected report on manufacturing in China and reassuring comments from a member of Australia's central bank. At 0615 GMT, the Australian dollar was at USD1.0460, up from USD1.0381 late Monday. Against the Japanese yen, the Australian dollar was at JPY80.315, up from JPY79.63.
Market expectation
In European hours, investors face a string of indicators that could move the euro. French purchasing manager's index figures for August are due at 0700 GMT, for Germany at 0730 GMT and for the whole Eurozone at 0800 GMT. The ZEW indicator of German economic sentiment for August follows at 0900 GMT. 

Any strength in the German ZEW reading could prod the euro to test USD1.4450, with any breach sending it to around USD1.4500, said analysts. 

Even if the data fall short of expectations, the common currency should stay above USD1.4250, as some investors bet the Fed may keep alive the possibility of further easing, weighing on the dollar, analysts said. 

European stocks are expected to start modestly higher Tuesday, following the positive sessions in Asia and the U.S. but a slew of European data could cap any gains if they show a slowing in growth and drop in economic sentiment, warned commentators.