The dollar tumbled against most majors with the exception of the pound as the UK economy contracted, spurring risk aversion and profit-taking in the cable. The EurUsd rose 54pips or 0.38% to 1.42 in light of expectation-beating IFO numbers from Europe, and an improvement in manufacturing and services. The GbpUsd slid 64pips or 0.38% to 1.64 due to the GDP surprise. The UsdJpy fell 31pips or 0.33% to 94.7 amid broad dollar weakness in the market. Equity markets were a fraction higher but remained largely steady after previous session’s rally, with the Dow up 25pts or 0.2% and the FTSE edging up 66pts or 1.47%. 10yr yield dropped 0.04 to 3.66%. Commodity prices were mixed, with oil up $0.77 or 1.15% to $67bbl and gold down $3.2 or 0.34% to $951oz.
After an astonishing rally beyond 9,000 yesterday, the dow jones opened lower on poor earnings reports from American Express and Microsoft. Later in the session equities turned higher as Black & Decker and Helthways released better-than-expected Q2 earnings. Further support came from Federal Reserve Chairman Ben Bernanke’s comments to the house financial services committee that the central bank would begin winding down its QE measures in light of the improving economy. Before the market close, equities and the dollar fell flat as tech shares in the S&P declined -1% and the July consumer sentiment index, although in line with expectations, was the lowest in five months at 66. Positive news in the euro zone sent the 16 nation currency rising .6% to 1.422 after Markit Economics reported the composite index of manufacturing and services industries rose to 46.8 in July versus 45.3 expected. In Germany, the Ifo institute’s business climate index increased to 87.3 versus an 86.5 expected. Contrastingly, terrible news in the U.K. drove the sterling down against a basket of currencies as GDP in the distressed region was reported to have contracted .8% versus .3% expected. Prime Minister Gordon Brown is preparing a report to examine what monetary and fiscal policy actions can be taken to spur economic growth and mend currency reserve imbalances. The Canadian dollar rose to C$1.0792, the highest level since June. The rise in equities sent WTI crude prices over $68bbl.
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G10 Advancers and Decliners vs USD
|Global Indexes|| Current Level|| % Change|
|DJIA Index||9,093.24||+ 0.26|
|S&P 500 Index||979.26||+ 0.30|
|NASDAQ 100 Index||1,965.96||- 0.39|
|FTSE futures||4,571.00||+ 0.87|
|SMI Futures||5,754.00||+ 0.07|
| World Markets|| Current Level|| % Change|
|Crude wti||68.02||+ 1.28|
|USD Index||78.75||- 0.32|
| Todays Calender|| Estimates|| Previous|| Country / GMT|