Dollar pares intra-day gain due to profit taking, sterling weakens on renewed Brexit woes

Market Review - 23/04/2019  23:43GMT  

Dollar pares intra-day gain due to profit taking, sterling weakens on renewed Brexit woes

The greenback climbed against majority of its peers, except versus safe-haven yen after Easter holiday as investors grew confident in the dollar ahead of U.S. GDP data, which will be released on Friday after recent economic data eased concerns of a sharply slowing U.S. economy, however, dollar later pared intra-day gain and retreated broadly in New York afternoon on profit taking. Sterling tumbled to a 2-month low on Brexit renewed worries.  
  
Reuters reported sales of new U.S. single-family homes jumped to a near 1-1/2-year high in March, boosted by lower mortgage rates and house prices.   
  
The Commerce Department said on Tuesday new home sales increased 4.5 percent to a seasonally adjusted annual rate of 692,000 units last month, the highest level since November 2017.   
It was the third straight monthly increase in new home sales. February's sales pace was revised down to 662,000 units from the previously reported 667,000 units.   
Economists polled by Reuters had forecast new home sales, which account for about 11.7 percent of housing market sales, decreasing 2.5 percent to a pace of 650,000 units in March.   
  
Versus the Japanese yen, although dollar fell swiftly at 111.97 at Asian open to 111.66 in Asian morning due to broad based buying in jpy, price found renewed buying and gained to 111.93 at European open on dovish comments by Bank of Japan's Maeda before the parliament, and then ratcheted higher to session highs at 112.03 in New York on usd's strength before retreating to 111.76 due to intra-day fall in U.S. Treasury yields.  
Reuters reported the Bank of Japan is ready to ramp up stimulus, including through a combination of various steps, if the economy loses momentum for hitting its 2 percent inflation target, a senior central bank official said on Tuesday.   
Eiji Maeda, the BOJ's executive director overseeing monetary policy, added that any further step must take into account the impact it has not just on the economy but on the banking system.   
  
The single currency initially retreated to 1.1245 at Asian open and then dipped to 1.1242 in European morning. Despite rebounding to 1.1262 (Reuters), renewed selling emerged and knocked price down to a near 3-week low of 1.1192 in New York on renewed usd's strength, however, price later rebounded to 1.1231 shortly after New York close on short covering.   
  
The British pound went through a roller-coaster ride. Although cable traded narrowly in Asia and then rallied to session highs at 1.3019 in Europe, price erased intra-day gains and dropped to a 2-month low of 1.2928 in New York as investors remained pessimistic that British PM May and the opposition Labour Party will have a breakthrough in Brexit talks soon.  
  
In other news, Reuters then reported the European Commission again ruled out on Tuesday any reopening of the withdrawal treaty negotiated with Britain last year after a media report in London that Prime Minister Theresa May had asked aides to review alternative arrangements for the Irish border.   
"It is excluded that we renegotiate or reopen the withdrawal agreement because this is the best solution possible," deputy chief spokeswoman Mina Andreeva told a news conference, citing remarks by Commission President Jean-Claude Juncker.   
She had been asked about a report about pro-Brexit members of May's Conservative Party pressing the prime minister again to seek changes to the treaty so as to remove the controversial "backstop" protocol that is intended to avoid disruptive customs checks on Northern Ireland's sensitive land frontier with the European Union.   
  
On the data front, Reuters reported euro zone consumer confidence fell unexpectedly by 0.7 points in April from the March number, figures released on Tuesday showed.   
The European Commission said a flash estimate showed euro zone consumer morale decreased to -7.9 this month from -7.2 in March. Economists polled by Reuters had expected a rise to -7.0.   
  
Data to be released on Wednesday :  
  
Australia CPI, France business climate, Germany Ifo business climate, Ifo current conditions, Ifo expectations, Italy trade balance, Swiss investor sentiment, UK PSNB, PSNCR, U.S. MBA mortgage application and Canada Bank of Canada interest rate decision on Wednesday.