Market sentiment appeared to have picked up moderately amidst hopes that China would implement stimulus measures to boost growth. Chinese Premier Li Keqiang indicated last Friday that the government would push ahead with infrastructure investment to stimulate the country’s growth.
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Investors Hope China would Stimulate
The US Dollar Index closed Friday’s session back under the 81 mark, after spending a week above that marker, but the Index remains above the 80.50 level, an area that has offered a little bit of support.
Latest Dollar Index Rate
The ICE US Dollar Index closed Friday’s session at 80.758 on the ICE Futures Exchange. Meanwhile, the dollar/euro remains flat in currency trading with one US dollar buying 0.73360 euro. Sterling extended its gains against the US dollar as the trading session wore on, climbing half a percent to $1.6412, its best level of this week.
US Unemployment
The dollar drifted lower after a weaker US jobs report on Friday but is seen as unlikely to dissuade the US Federal Reserve from diverting from its path of steadily removing monetary stimulus from the US economy, possibly sooner, rather that later.
“I think the market reaction to today’s number is based upon a more pessimistic reading of the economy than I think is justified and therefore the market expectations that the Fed may not now taper in March may be less justified than the market thinks it is,” said David Woo, head of global rates and currency research at Bank of America Merrill Lynch, leading to the dollar’s decline.
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US Dollar Index closes down at a one week low near 80.7
Crude oil prices rebounded on WTI-Brent spread trading and a report from Reuters anticipating decline in Cushing stock. These upstaged speculations over the increase supplies as tensions in Libya ease and Iran prepares to resume exports. The front-month WTI contract gained +1.77% to settle at 97.41, after a 2-day drop, while the Brent crude contract climbed +0.67% to settle at 107.41. The spread narrowed to -10 at close, a level not seen since early November last year.
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Crude Oil Rebounded ahead of FOMC Meeting
We have a short, and likely quiet, week as Christmas is coming. Asian and European shares climbed higher, carrying forward US markets’ optimism last week as well as reacting to IMF’s upgrade of US economic outlook. In China, money market rates shrugged off the government’s money injection and rise for a 7th day.
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Sentiment Lifted as IMF Indicated to Raise US’ Growth Forecast
Stocks remained under pressure in Asian session on Monday as US fiscal ceiling stalemate continued. House speaker John Boehner indicated the House would not approve to raise the debt ceiling without packaging it with other provisions, i.e. postponement of Obama’s healthcare plan – a condition that Obama would refuse to accept.
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Overhang of US Shutdown Continues to Pressure Stocks
The US Dollar Index once again moved over 83 in early trading this morning as the euro currency continues to face a dilemma for investors, traders and well, the general public as all eyes focus on the situation in Cyprus for clues on the long term future of the euro and in fact, the EU.
Latest US Dollar Index Rate
As of 08:22 GMT this morning, the ICE US Dollar Index, which tracks the greenback against a basket of major world currencies was at 83.005 for the second time this week. Forecasts are that the index will continue to hold between 82 and 83 in the short term.
Cyprus – Euro to USD Shift
Financial turmoil in Cyprus, where the parliament rejected a plan an euro zone bailout deal that would have taxed bank deposits, is prompting investors to shift cash from euro zone countries (not only Cyprus) to the US and hence is boosting the dollar’s appeal once more as a safe haven currency.
Fears that Cyprus’s two biggest banks may collapse if a bailout is not agreed have seen investors ditch the euro this week, but what will happen when the Cypriot banks re-open for business again? I think theres no doubt that it’s going to be interesting to watch this one.
Negotiations over the form of the Cypriot bailout and in particular the bank levy continue without conclusion, while the ECB said on Wednesday that it assumed the temporary shutdown of Cyprus banks would extend to the end of week. Yes, that’s the end of next week…
The Cyprus bailout plan has “pushed the euro sharply lower at the start of the trading week amid rising fears of mass capital flight,” wrote Ilya Spivak, currency strategist at DailyFX.
“This potentially carries the risk of a regional credit crunch, which could raise questions about the solvency of some weaker lenders. If one were to topple, a global crisis akin to the fall of Lehman Brothers would not be out of the question,” he wrote.
Hands Tied to the Euro
And the problem doesn’t stop with Cyprus as other EU member countries including Spain, Italy, Portugal, Greece and Ireland remain with hands tied to the euro whilst their economies face big financial challenges.
The trigger for another global crisis may well be pulled by decisions over the next few days, keep your eyes on events in Cyprus for clues of the US Dollar’s direction.
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US Dollar Index pushes back over 83 as euro currency dilemma continues
Positive market sentiment carried forward to Asian session on Monday as US’ employment data came in better than expected. Non-farm payrolls increased +236K, compared with consensus of 158K and a downwardly revised 119K in January. The jobless rate was lowered to 7.7% from 7.9% in January.
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Sentiment Remains Upbeat on Monday
The US markets reopened after 2 days’ closure. However, investors’ sentiment was lukewarm as the focus was on the impacts of Hurricane Sandy on the economy. It’s expected that the clean-up bill would be huge and so far, around 6 million homes and businesses remain without power. Flights and subway in affected areas only resumed limited services.
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Chinese Manufacturing Sector Returned to Expansion while US Data Disappointed
For Today’s Exactrade of the Day we are looking at SRPT, Sarepta Therepeutics: *SRPT *is gapping up into possible resistance on the daily chart. Look to take *SRPT* short on a new low below the open with strong volume. Wait at least 2 minutes after the maket open and look to take it short once it makes a new low of the day. If *SRPT *moves up at the open simply set an alert at the low of day and take it short if it breaks that low of day. First target is .31 from your entry, second target is .62 from your entry. Manage the last piece with a trailing stop. Remember to always use a stop. To Your Success, Statistics: Posted by Exactrades — Wed Oct 03, 2012 9:18 am
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Stock Watch • SRPT, Sarepta Therepeutics
Financial markets steadied as investors awaited German Constitutional Court’s ruling on the ESM/fiscal compact and the People’s Bank of China reported RMB 704B of new loans in August, up from a disappointing RMB 540B in July. Positive comments from the Troika after meeting with Portuguese and Greek officials also helped sustain sentiment. News reports said that Spain has proposed a 3-step plan towards a Eurozone fiscal union.
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Sentiment Mildly Positive ahead of German Constitutional Court’s Ruling