The two day dollar decline against the euro is stalling after the U.S. session. The range-bound trading, which has lasted nearly 7 hours, continues in the Asian session of February 3rd. It is currently trading at EUR/USD 1.3962.
The dollar, which began to drop in earnest against the euro around 3:30 am GMT on February 2nd, lost as much as 21 pips since the opening of the U.S. stock market and 55 pips since the opening of the London stock market.
The dollar has generally been negatively correlated with the U.S. stock market since the financial crisis began. It has been dropping against the euro for the past two days as the S&P 500 had its best two-day gain in nearly three months, according to the Wall Street Journal.
The Japanese Nikkei 225 is up 0.09 percent. It traded higher earlier in the session but has pared gains since then. Toyota, Japan's leading carmaker, is trading down over 3 percent.
White House advisor Paul Volcker testified before the Senate Committee on Banking from 2:30 pm to 5:30 pm. He stated that curbing the proprietary interests of commercial banks is in the interest of fair and open competition as well as protecting the provision of essential financial services.
Volcker argues that banks were bailed out because they provide an essential function to society. Propriety trading, he argues, falls outside the scope of that essential function and thus should not enjoy the same taxpayer protection.
He also hinted that he may seek further restrictions against banks. Volcker said his proposal to restrict proprietary trading is a part of the broader effort for structural reform.
Although the broad stock market continued to rally in the afternoon, U.S. financial stocks showed signs of faltering.
Few regional banks plunged in afternoon trading and Wall Street firms spiked down around 2 pm, although most recovered their losses in the last hour of trading. European banks traded on the New York Stock Exchange did not show the same signs of faltering.
Japanese investors must also digest Toyota's (NYSE:TM) U.S. January sales number. While Ford (NYSE:F) increased its sales by 29 percent year-on-year and GM gained 14 percent year-on-year, Toyota's sales dropped 16 percent.
Toyota recalled some of its vehicles in January because of faulty gas pedals. Although the firm announced that it has completely fixed its problem, investors continue to sell its shares on the Tokyo Stock Exchange.
The U.S. stock market surged today, with the S&P 500 Index gaining 1.30 percent, the Dow Jones Industrial Average gained 1.09 percent, and the Nasdaq Composite gained 0.87 percent.