Debate Surrounds US Govt. Bailout, Dollar Slowly Recovers
Debate Surrounds US Govt. Bailout, Dollar Slowly Recovers
The Usd gained back some of yesterday’s losses as pressures regarding the outlook of the US economy fade. The EurUsd slid nearly 140 pips to the low 1.46 level, while the UsdJpy rose 20 pips to the high 105 price area. The GbpUsd is mostly flat off about 10 pips from the previous close trading with a 1.85 handle. The equity markets are flat as Bernanke and Paulson address the Senate regarding the govt. bailout plan. European Stocks fell with the FTSE in particular down over 100 pts, the CAC lower by 84pts, and the DAX weaker by 40pts. Commodities declined with oil trading at 106 and gold down as well at 890. Bond yields tightened with the 2yr treasury lower by 6bps, the latter portion of the curve followed suit with the 10 and 30yr in 2-3bps.
German PMI surprised to the downside, coming in at 48.1 vs. 49.2 exp. This reading is the lowest seen since late 2001, shifting the focus back to the likelihood of the Eurozone falling into a recession. ECB Pres. Trichet stated that markets are trading “hectically” but affirms that their stance regarding monetary policy will be to preserve price stability. Making the likelihood for a rate cut anytime soon, less and less probable, this may result in a serious dilemma due to waning growth. Light data out of the UK, hence why cable prices have remained very mostly flat. We hold a bearish position on the US for the near-term, with a bias to the upside of the next several months as the market gets comfortable with the govt. bailout plan.
US data continued to deteriorate, with HPI (Home Price Index) figures coming weaker than expected at -0.6% vs. the estimate of -0.2%. The Richmond Fed. Manufacturing Index also came in at -18 vs. -12 expected, signifying the retraction in overall production. Dollar trading will become increasingly sensitive to the economic news as Traders look for signs of stabilization, particularly in the housing sector. The EurUsd should remain rangebound between 1.44-1.48, with a bias to the upside over the near-term.
AC Markets
http://www.ac-markets.com
Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Sorry, the comment form is closed at this time.