Dollar weighed by falling US Treasury yields
- The US dollar fell broadly on Thursday's currency markets after a 29 billion auction of seven-year Treasury bonds attracted significant demand which pushed Treasury yields lower. After the auction the dollar appeared under pressure as lower yields do not attract investors seeking greater returns. This week's poor US data raised concerns about the sustainability of the US recovery. The market awaits today's Jobless Claims data which is expected to decline by a significant 5K and Monday's Manufacturing data hoping to give a clearer insight about the US economy. EUR/USD rose hitting intraday high at 1.3258 from 1.3108
- Against the Japanese Yen, the dollar plummeted hitting a seven-week low at 81.28 towards the 81.00 level. Fears that the dollar will fall to a 15-year low at 80.23 are heightened as trading is thin and moves are exaggerated. Japan's Finance Minister commented on the end of year dollar-yen moves and said that Japan will take decisive steps if uncomfortable levels are hit. Japan intervened in September spending almost 24.7 billion dollars in the currency markets to push the yen lower as an appreciated yen hurts the country's exports.
- The Australian dollar rallied against the US dollar on Thursday supported by surging commodity prices. A positive outlook for Australia's economy in 2011 raised demand for the high yielding Aussie which hit a fresh 28-year high at 1.0197 dollars. Fears caused by the recent interest rate hike in China, Australia's largest export partner, started to fade as investors speculate that demand for the country's commodities will not be hurt.
- Gold edged higher today helped by rising concerns about the US recovery which raised demand for safe-haven assets. The precious metal climbed near a one month high at 1414.30 dollars an ounce also helped by a weaker dollar which makes gold a cheaper investment for investors outside the United States.
Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.3170 with a preference to enter into Long positions at 1.3170
- § The USDJPY pivot point is at 81.85 with a preference to enter Short positions at 81.85
Today's calendar and market movers:
- § US Initial Jobless Claims data is forecasted to fall to 415K
US equities closed positive on Wednesday with the S&P500 up 0.10% and the DJIA up 0.09%. The European bourses were mixed with the FTSE trading down 0.21% and the DAX and the CAC trading up 0.34% and 0.83% respectively. The NIKKEI and the HSI at the time of writing are trading down 1.12% and down 013% respectively.
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