Dollar Declines On Risk Tolerance
Dollar Declines On Risk Tolerance
Overall, the major currencies surged against the dollar as investors are again thinking that the global economy is heading towards recovery. This, in turn, has investors dropping their U.S. dollar denominated assets in the favor of higher yielding assets, denominated in foreign currencies. The currency market may test the highs reached at the beginning of June, as the dollar’s outlook lies to the downside.
The Euro (Eur/Usd) surged 180 pips throughout the second part of the day, on Tuesday, as the S&P futures were struggling to break above the 941.00 resistance area. The euro’s uptrend started just before the U.S. open, even though the euro lost a few pips during the overnight session.
The Pound (Gbp/Usd) rose as much as 300 pips during Tuesday’s trading session, having probably one of the strongest days of the current year. Most of the gains came during the late European session and throughout the U.S. trading hours, similar to how the other major pairs performed today. During the overnight session, a report showed that house prices rose 1.1% in May from the preceding month.
The Aussie (Aud/Usd) was today’s top performer, gaining 150 pips or almost 2%, the most in percentage terms among the major pairs. Moreover, helped by the gains seen on Tuesday, the aussie recovered the ground loss in the previous two days of trading, and even advanced a few more pips.
The Cad (Usd/Cad) tested the neutral pivot point during the early Asian session, but soon after the pair started heading lower. The cad declined as much as 160 pips, after the pair formed a pin-bar bouncing off the 20-day moving average on Monday.
The Swissy (Usd/Chf) fell more than 150 pips during the late European and the U.S. sessions on Tuesday. During the second part of the U.S. session, the swissy traded sideways near the 1.0800 area, where the pair met the trend-line that connects the 04.22 and the 05.07 highs. However, the pair resumed its decline as the S&P futures headed towards the 945.00 area.
The Yen (Usd/Yen) headed only lower during Tuesday’s trading session, declining nearly 130 pips. During the U.S. session, the pair broke below the support trend-line that connects the 03.19 and the 04.28 lows and at the same time below the 50-day moving average.
Global Markets Continue To Trade Mixed
Current Futures: Dow +33.00, S&P +5.90, NASDAQ +16.00
European markets closed Tuesday’s session trading again mixed. U.S. markets followed a similar patter, and so far, the major U.S. indexes traded within the range of the last few days of trading.
European markets saw light volume of trading, as the major indexes from the region were unable to break-free from the sideways trading seen lately. Both the German Dax and the U.K. Ftse closed the trading session slightly under the break-even line, even though the two indexes opened almost 1% higher on Tuesday morning. In Europe, the major gains were seen in the technologic sector as Texas Instruments raised its earnings forecasts, and in the financial sector.
In the U.S., the gains observed in the technologic and raw materials sectors helped to offset the declines seen in the consumer and industrial shares. Similar to the price-action from the overnight session, technologic shares were lifted after Texas Instruments, one of the biggest chipmakers in the world, updated its earnings forecasts, TheLFB-Forex.com Trade Team said. Raw materials advanced, as crude oil gained almost 2.50%, while the industrial metals rose 4% throughout Tuesday’s trading session.
Consumer and industrial shares declined after Procter & Gamble said that the conditions in the consumer’s market remain tough. On top of this, a release pointed out that wholesalers reduced their inventories for a seven month in a row, maintaining a similar contraction speed as in the previous months. To some extent, this does not justify the market’s belief that businesses are currently building up inventories, TheLFB-Forex.com Trade Team said.
Overnight, the Japanese Nikkei fell 78.81 points (0.80%) to 9,786.82. The Australian S&P/Asx declined 36.30 points (0.91%) to 3,934.90. The U.K. Ftse fell 0.43 points (0.01%) to 4,404.79, while the German Dax fell 6.86 points (0.14%) to 4,997.86. The Dow Jones added 20.94 points (0.24%) to 8,785.43, while the S&P 500 rose 4.91 points (0.52%) to 944.05.
Crude oil for July delivery was recently trading at $68.80 per barrel, higher by $1.70.
Gold for July delivery was recently trading higher by $2.50 to $955.00.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
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