Greenback Looks to Rebound
04-01-2012
There is plenty of exciting action in the European front today, as the European Financial Stability Facility (EFSF) plans to raise an additional 3 billion Euros in order to combat the union’s worsening debt crisis. European leaders are scrambling after the credit rating agency Standard & Poor’s announced that the EFSF may lose its top credit rating in the near future. Germany plans to sell 5 billion Euros worth of bonds today, in part to aid cash starved countries Greece, Portugal, Spain and Italy.
U.S. Dollar Plunges
The USD declined against major currencies yesterday, with the EUR/USD trading at around 1.3059 at midday. The greenback decline is attributed in part to yesterday’s PMI report which came back at a positive 53.9, causing traders to seek riskier assets. The USD also weakened against both the Yen and the Swiss Franc, coming in at 76.67 and 0.930. The dollar index fell by 0.91 and now sits at 79.85. The dollar index tracks the performance of the USD against six other major currencies.
Wall Street Bullish
The first full day of trading on Wall Street concluded with sharp gains, as traders sentiment was boosted by a strengthen American economy. The Dow Jones industrial closed at 12,397.38 yesterday, its highest end of day numbers in the last five months. The S&P 500 index experienced more modest gains, finishing at 1,277; identical to the numbers we saw from the index at the end of 2011. Economic history shows that January on Wall Street is a good indicator for U.S. Stocks throughout the rest of the year.
Economic Calendar Quiet
The economic calendar is mostly quiet today, with only two reports of any significance scheduled for release; the Trade Balance from Australia and the Construction PMI in the UK. The Australian Trade Balance report has returned negative results over the last two months, an indicator that the Australian economy is starting to lose steam, after a 2011 which saw the Aussie hold strong against other major currencies.
Commodities drop as investors looks for risk
With the exception of natural gas, all major commodities were on the decline at the time of this writing. Investor risk appetite was apparent amidst strong economic data, causing many to leave the safe havens of gold and silver. In trading today thus far, gold is down 0.04% and trades at 1599.85, while silver took a sharper decline, trading at 29.158, down by 1.40%. Both Crude and Brent oil are down as well, trading at 102.67 and 111.86.
USD strong in early trading
Reversing the trend from yesterday’s decline, the greenback looked strong in Asian trading. GBP/USD is down 0.04% at 1.5643. The direction of the U.S. Dollar will likely correlate with the initial jobless claims report and the ADP National Employment Report, both to be released on Thursday. On Friday, the Bureau of Labor Statistics is scheduled to release its December unemployment numbers.
Asian Stock on the rise
Positive signs from the United States and China helped energize the Asian Markets, with several indices showing an upward trend. The S&P/ASX200 out of Australia was up by 2.07 and the Japanese Nikkei also increased by 10.4%. The Hang Seng was down slightly however by 0.28% in early trading today.
