Driven by advance in stock markets and decline in USD, crude oil surged +1.4% to settle at 79.61 Monday. Today in Asia, the benchmark contract extends recent rally and rises to as high as 80.05. Winning streaks in oil products persist. ROBA gasoline climbs for the 7th day and trades 1.993 while heating oil soars for the 9th day and trades at 2.057, the highest level in 11 months.
Gold closed higher for the second day after a brief pullback last week. The benchmark contract closed +0.6% high at 1058.1. Currently trading at 1066, the yellow metal's rise continues today as driven by weakness in USD. The dollar index plummeted to 14-month low at 75.25 (closed at 75.5) Monday.
Stock market rose in both US and Europe as investors anticipate strong corporate earnings. Dow Jones Industrial Average gained +0.96% to 10092 while S&P 500 added +0.94% to 1098. Released Monday, Gannett, the biggest US newspaper publisher, released better-than-expected earnings results. Shares jumped more than +8%. This also triggered speculations that other companies will report robust earnings for the third quarter. Including Texas Instruments and Apple Inc, 138 companies in the S&P 500 Index will be reporting 3Q09 earnings this week. Investors will be interested to see how a weak dollar benefited corporations.
Today in Asia, stock market also advances with the MSCI Asia Pacific Index surging to the highest level since September 2008. In Japan, the Nikkei 225 Stock Average adds +0.9%to 10315. In Australia, the S&P/ASX 200 Index also jumps +1.4% as material stock Rio Tinto rallies.
USD's recovery was short-lived and renewed selling pressure was seen yesterday despite NY Fed's comment on reverse repurchase agreement. In a statement, the Fed said that it's working on how to use reverse repo to reduce the amount of cash it has added to the financial system. Moreover, the central bank is considering expanding the counterparties for reverse repo beyond 18 primary dealers that trade with the Fed.
Theoretically, the reverse repo operation is USD-supportive as this helps draining cash from the financial system. However, investors continued to sell the dollar after the statement. This was probably because there's still no timeframe for the operation to be carried out The market was also disappointed as the Fed Chairman Bernanke did not talk about the path of the Fed Funds rate at a San Francisco Fed conference yesterday.