USD - USD Plummets as Stock Markets Rally
The Dollar dropped against most of its major currency counterparts yesterday as a rally in global stock markets diminished demand for the safety of the U.S currency. The Dollar traded at $1.4108 per EUR after sliding 1% yesterday and reaching a day's low of $1.4135, the weakest level since July 2nd. However the USD was up against the Yen trading at 94.36 from 93.39 late Tuesday.
Better than expected results from the New York Manufacturing Index and as expected results from the Consumer Price Index (CPI) which were released Wednesday put further pressure on the Dollar. However the major mover in the market Wednesday were the equity markets, with U.S stocks rallying sharply following the release of better than expected 2nd quarter earnings from Intel.
It is likely that earnings results will continue to dominate market movements in the following days as the earnings from J.P. Morgan Chase, Citigroup and Bank of America are due later this week. Traders should also follow the release of the Unemployment Claims, TIC Long Term Purchases and the Philly Fed Manufacturing Index to be released today at 12:30 GMT, 13:00 GMT and 14:00 GMT respectively as these results may either strengthen or reverse the current bearish sentiment on the Dollar.
EUR - EUR Gains on Renewed Market Optimism
Benefiting from the return of risk appetite and gains in equities the EUR traded at $1.4112 versus the USD, up from $1.3935 late Tuesday. The EUR was also up against the Yen trading at 133.12 up from 130.14 yesterday. The British pound jumped to $1.6425 against the USD from $1.6270 Tuesday.
The EUR was little changed after a report showed Annual Consumer Price Inflation in the Euro-Zone fell 0.1% in June, marking negative inflation in the region for the first time since its creation. The British Pound rose 0.6% versus the Dollar following gains in financial sector stocks. The Pound was little affected by the overall pessimistic economic data released Wednesday from the U.K. The data showed the number of people claiming jobless benefits in June rose at its slowest pace in more than a year; however the overall unemployment rate rose to its highest level since January 1997.
With no major news due to be released today from Europe, traders should follow the data to be released from the U.S as these will have great affect on any USD currency crosses. Furthermore, traders should follow closely the continuing release of the corporate earning reports as they will continue to be the driving force behind the movement in equity markets and consequently the demand for riskier currencies such as the EUR and GBP.
JPY - The Yen Slides as Investors Move to Riskier Assets
The Yen slid against the EUR, trading at 133.01 per EUR after declining as much as 2.1% in its largest intraday loss since May. The Yen was also down 0.8% against the USD trading at $94.25. The drop followed a report that showed U.S. industrial production for June fell less than forecasted and Intel Corp.'s second quarter earnings were higher than estimated.
The JPY experienced a phenomenal rally these past two weeks as investors retuned to the safety of the Japanese currency following the release of poor U.S employment data. However, this rally was snapped Monday with a better than expected start to the 2nd quarter earnings season. The positive earnings reports from Goldman Sachs and Intel rekindled risk appetite among investors diminishing demand for the safe haven Yen and in turn pushing them to riskier, higher yielding currencies. With stock markets continuing to rally it is likely the JPY will extend its losses during today's trading as well.
OIL - Oil Prices Rise as U.S stockpiles Fall
Crude Oil continues to climb as stock markets rally and U.S Crude Oil Inventories showed a larger than expected decline. Crude oil for August delivery rose as much as 47 cents or 0.8% to $62.01 a barrel Wednesday. The weak Dollar and huge rally in the stock market following the release of Intel's forecast sales helped boost Oil prices. Crude inventories fell by 2.81 million barrels vs. the expected 2.1million and refineries are operating at 87.9%, the highest since August. However demand is still weak and so it is unlikely Oil prices will reach $70 a barrel again in the short term and it is likely to remain in the $60-$65 range.
Article Source - Crude Rises the Most in 3 Weeks
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