The US dollar slid across the board in the Wednesday session as improving risk-appetite dragged the currency lower versus the euro and Canadian dollar. The global equity bourses traded higher with the Shanghai Composite index leading the advance, surging by nearly 2.8% while Germany's DAX index edged up by almost 2%. Crude oil also rallied, popping higher by over 3.4% $74.45-per barrel while spot gold eased slightly by 0.6% to $1,229-per ounce. Meanwhile, the US equity bourses also traded higher with the Dow Jones, Nasdaq and S&P 500 improving by almost 1%.
Amid a quiet day of US data, traders looked to Fed Chairman Bernanke's Congressional testimony before the House Budget Committee and the Fed Beige Book for market direction. Bernanke described the impact on US growth from the ongoing Eurozone deficit crisis as moderate but stressed that the housing and labor markets will continue to weigh on the economy. He expects GDP around 3%-4% this year and said he doesn't anticipate a double-dip recession but cautioned that it cannot be ruled out though.
The Fed's Beige Book offered a tepid assessment of the US economy, stating that economic activity continued to improve since the last report across all 12 Federal Reserve districts, albeit at a modest pace.
In the coming session, traders will look ahead to monetary policy decisions from the RBNZ, the BoE and the ECB. Among the central banks, only the Reserve Bank of New Zealand is expected to change policy, hiking interest rates by 25-basis points to 2.75%. Meanwhile, the BoE and ECB are expected to leave rates unchanged. Traders will also focus closely on the subsequent press conference from ECB President Trichet.
Economic reports scheduled for release on Thursday includes the April trade deficit - forecast to increase to $41 billion versus $40.4 billion and weekly jobless claims, estimated to decline marginally to 450k from 453k.
EURUSD holds steady around 1.1990 with support seen at 1.1940, followed by 1.19 and 1.1860. Subsequent floors are eyed at 1.1830, backed by 1.18 and 1.1750. On the topside, resistance is eyed at 1.20, followed by 1.2050 and 1.21.