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Market Review – 12/06/2020 00:00GMT
Dollar rallies broadly on safe-haven demand after plunge in U.S. stocks
The greenback snapped its recent recent losing streak and rallied across the board except versus yen as plunge in U.S. stocks (Dow closed down 6.9% at 25128) triggered active safe-haven usd buying in hectic New York session.
On the data front, Reuters reported new applications for state unemployment benefits fell to a seasonally adjusted 1.542 million for the week ended June 6, from 1.897 million the prior week, the Labor Department said on Thursday. That pulled initial claims further away from a record 6.867 million in late March.
Economists polled by Reuters had forecast 1.55 million claims in the latest.
Versus the Japanese yen, although dollar moved sideways in Asia and rebounded from 106.90 to 107.23, renewed selling emerged and knocked price down to 106.80 in European morning on cross-buying in jpy. However, the pair then recovered to 107.13 on short-covering but only to tumble to a near 1-month low at 106.58 in New York on selloff in U.S. equities before staging a recovery.
The single currency went through a roller-coaster ride as despite falling from 1.1396 in Asian morning to 1.1326 on profit-taking, the pair rallied to 1.1401 in Europe on cross-buying in euro, especially versus sterling but only to retreat to 1.1337 at New York morning. Price then rose again to session highs of 1.1403 before tumbling to 1.1289 at New York close.
Reuters reported the European Central Bank will do anything possible to ensure that the current crisis is not made worse by a credit crunch, its Chief Economist Philip Lane told Il Sole 24 Ore in an interview published on Thursday. When asked if any new interest cuts were possible, Lane added that the net asset purchases under the Pandemic Emergency Purchase Programme (PEPP) had proven to be particularly effective in the current state of uncertainty and market stress.
The British pound met renewed selling at 1.2754 in Australia and fell to 1.2651 in European morning on profit-taking after rising for ten consecutive days before recovering to 1.2719 but only to drop to 1.2634 in New York morning. Despite a rebound to 1.2684, cable later tumbled to 1.2587 at New York close.
In other news, Reuters reported China and the United States should resume timely communication on trade and other issues, an adviser to the Chinese cabinet said on Thursday, stressing that the world’s two biggest economies are too intertwined to be decoupled.
Data to be released on Friday :
New Zealand manufacturing PMI, food price index, Japan industrial output, capacity utilization, UK GDP, industrial output, manufacturing output, construction output, trade balance, NIESR GDP estimate, France CPI, EU industrial production, U.S. import prices, export prices, University of Michigan sentiment, and Canada capacity utilization.