Market Review - 20/01/2010 21:15 All times in GMT

Dollar and yen continue to gain on broad-based risk aversion



The single currency continued its recent descent and tumbled again yesterday in early Asian trading, despite initial sideways move at Tokyo opening after Tuesday's selloff to 1.4252, some big players managed sold euro aggressively in order to trigger stops below said low and more stops below recent major sup at 1.4218. After falling briefly to a five-month low of 1.4080 in NY afternoon, euro remained under pressure for the rest of the day amid worries about Greece ability to finance its deficit.

Commodity currencies fell broadly on Wednesday after Chinese media said banks were being told to curb lending. Australian dollar fell over 1.8%, New Zealand dollar shed 2.8% and weaker-than-forecast Canadian inflation data knocked the Canadian dollar over 1.5% down against the greenback to a two-week low of 1.0490. Spot gold also tumbled by over $30 an ounce, price hit an intra-day low of $ 1107.00 before staging a recovery.

The U.S. dollar rose broadly on increased risk aversion due to selloff in global stock markets and hopes that the Republican upset victory for the vacant U.S. Senate seat from Massachusetts will force Congress to rein in the fiscal deficit, the DJI closed down by 122 points. In other news, U.S. housing starts dropped by 4.0% to 0.557 million units whilst building permits rose by 10.9% to 0.653 million units. U.S. PPI came in at 0.2% m/m n 4.4% in December.

Data to be released on Thursday include New Zealand retail sales, Australia Westpac leading economic index, Swiss ZEW index, U.K. CBI industrial trend, U.S. jobless claims, leading indicators.