Euro recovers losses after a rise in US Treasury yields

  •  The US dollar held steady on Wednesday after it recovered from losses versus the euro helped by a rise in US Treasury yields. Investors were attracted by the higher return on Treasury bonds although some argue that higher yields might underline a problematic fiscal situation.
  •  The euro plummeted to 1.3083 against the US dollar on Tuesday from 1.3274 dollars. Today the euro edged higher hitting 1.3150 above the 1.31 level in volatile and thin trading conditions. As the year end approached market moves are exaggerated and do not always follow fundamentals.
  •  On Tuesday, US data disappointed the market and raised questions about the US recovery. Consumer confidence in December fell from previously while the market expected a significant increase. Also, Home Prices in October fell 0.8% far below expectations of a 0.1% decline.
  •  Against the Japanese Yen, the US dollar slid to near 7 week low to 81.82 from 82.95 traded. The dollar also slid versus the safe haven franc falling to a seven and a half low at 0.9434 from 0.9645 traded. The dollar was last traded at 82.16 versus the Yen and 0.9508 versus the franc.
  •  The Australian dollar traded near record highs today supported by surging commodity prices and optimism about Australia's economic outlook. Demand for the high yielding currency gave it a lift above parity versus the US dollar and on Tuesday it hit an intraday record high at 1.0151. On Wednesday it continued its upward trend and it was last traded at 1.0113 dollars.
  •  Gold rallied on Tuesday and today it extended its gains to rise near a two-week high at 1407.13 an ounce. Poor data from United States raised concerns about the sustainability of the country's economic recovery which raised demand for the safe-haven metal.    

 Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3170 with a preference to enter into Short positions at 1.3170
  • § The USDJPY pivot point is at 82.55 with a preference to enter Short positions at 82.55

Today's calendar and market movers:

  • § Germany's Consumer Price Index in December is forecasted to gain 0.9% MoM
  • § Switzerland's KOF Leading Indicator is forecasted to slightly fall to 21.0

 Equity Markets:

 US equities closed positive on Tuesday with the S&P500 up 0.08% and the DJIA remained unchanged. The European bourses were mixed with the FTSE unchanged, the DAX trading up 0.02% and the CAC trading down 0.09%. The HSI at the time of writing is trading up 1.16% and Nikkei is trading up 0.50%

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