The dollar managed to rebound after consistent selling early in the trading session. The EurUsd stayed within a range of 50pips finding support at 1.43, while the UsdJpy fell 40pips to 94.18. The GbpUsd reversed early gains declining 70pips to the mid 1.63 level emphasizing the heightened level of market volatility. Equity markets closed on a positive note with the Dow up 30pts or 0.32% and the SPX higher by 2pts or 0.24%. Commodities were roiled by the upswing in dollar strength resulting in a 4.01% in WTI (crude oil), as well as similar losses in agricultural futures. Bond yields are approaching notable benchmarks as the 2yr fell to 1.008% a key level by which investors may be bracing for a major downward correction in equities.
A series of strong economic data enabled markets to remain resilient under late selling pressure in New York. Patterns in risk sentiment continue to influence price action, and the better than expected housing figures are probably most significant considering the role housing has played in the root of the credit crisis. The Case & Schiller Index fell less than estimated by 14.92% vs. 19.75%, leading setting the stage for some early upward momentum for currencies who benefit from higher risk appetite like the Eur, Gbp, Aud, and Nok etc. Consumer confidence magnified positive bias with a reading of 54.1 vs. 47.9 leading to some crowding in dollar shorts. In addition, President Obama confirmed Fed Chairman Bernanke’s position and asserted confidence in past and future performance. The wave of exuberance met some resistance and eventually dissipated mostly due to lackluster volume.