Market Brief

Risky currencies had a strong rally overnight, as stock markets rallied ahead of some important earnings reports and economic data today. US financials led the US equity markets higher (6.5%), ahead of the first bank earnings release. The positive sentiment has carried over to Asian and European trading. The EURUSD remained elevated, trading in a 1.3960 to 1.4010 range, while the USDJPY traded with an upward bias to 93.28 from 92.80. While some currencies have seen decent price action, overall most are trapped in range bound trading. This lack of direction accompanied by low volumes strongly stinks of listless summer price action. With the USD weaker, oil and gold were able to shrug of its recent downtrend. Crude wti fell to a low of $58.30bbl before rallying above $60.00bbl, while gold drove above $921oz (oil and gold correlations with the USD have increased over the past months). In New Zealand, RBNZÕs Bollard spoke this morning, stating that the country needs a weaker exchange rate: What is needed is for the New Zealand dollar to be persistently weak over the coming years, to encourage the needed business investment to be export-oriented and supportive of improvement in New Zealand 's external liability position. With German ZEW, Eurozone industrial production and US retails, as well as the corporate earning season kickoff with Goldman Sachs, this will prove to be an interesting trading day.