Risk appetite gained a boost from better-than-expected home sales and a BoC’s report that the recession was over in Canada, spurring a rally in the equity markets as the Dow rose above the 9000 level. The EurUsd traded sideways and finished 11pips lower to 1.41. The GbpUsd rose steadily in light of the better retail sales number, which rose 1.2% vs 0.4% forecasted, sending the pound 30pips higher to 1.64. The UsdJpy climbed 144pips to 95.0, continuing a two-day winning streak for the dollar. Yields steepened across the curve as resurgence in risk appetite prompted traders to steer away from treasuries; the 10yr yield rose 0.137 to 3.68%. Commodity prices were mixed, with oil rising $1.78 or 2.7% to $67bbl and gold edging down $3 or 0.3% to $950oz
The early session saw a rise in equity futures as the dollar came under pressure in anticipation of jobless claims which came out higher at 554k. Despite investor optimism, the dollar index briefly turned positive as bellwether McDonalds reported poor earnings. Midday, the dollar fell to $1.4291 against the euro as equities turned higher on a report showing June home sales rose more than expected to $4.89mln, lifting hope that the housing sector and consequently the economy may be on the road to recovery. Earnings reports from eBay, Ford, and 3M were all upbeat; combined with housing data, the dow jones industrial average rose above 9000 points for the first time in six months. The yen saw an .8% decline against the euro to 134.27 after Japanese Finance Minister reported that exports had slowed to 35.7% in June from 40% in May. Dissimilarly, the Eurozone deficit narrowed to -1.2bln in May from -6.1bln in April. In the U.K, despite a rising current account deficit, sterling traded near one month highs as retail sales rose 1.2% m/m last month versus .3% expected. The British Bankers Association announced a 4,073 increase in June monthly mortgage approvals. In Canada, the loonie appreciated 1.4% to C$1.0841 as a BoC report forecasted a 1.3% increase in annual output and suggested the recession would end this quarter. The central bank has revised its forecast for economic contraction in 2009 to 2.3% from 3% in April. Despite low demand, NYMEX September crude futures rose $1.61bbl to surpass $67bbl as investor confidence was supported by positive equities and economic data.
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G10 Advancers and Decliners vs USD
|DJIA Index||9,069.29||+ 2.12|
|S&P 500 Index||976.29||+ 2.33|
|NASDAQ 100 Index||1,973.60||+ 2.45|
|Nikkei 225 Futures||9,810.00||+ 0.31|
|Hang Seng Futures||19,799.00||+ 0.00|
|FTSE futures||4,531.50||+ 1.66|
|SMI Futures||5,750.00||+ 2.26|
|Crude wti||67.16||+ 2.69|
|USD Index||79.01||+ 0.32|
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