Forex Review
Spain will be attempting to access the bond markets later today with €3 billion in targeted issuance of up to 7-year maturity. The short end of the yield curve continues to creep higher as the 10-year note closes back in on yields of 7%. Mariano Rajoy has imposed several rounds of austerity that have been met by fierce opposition from the public who are now protesting the latest spending cuts and increased taxes. France will also be auctioning 3 and 4-year debt later today. Equity indices rallied across the board as the French CAC 40 led gainers, strengthening1.84% followed by a 1.62% rise in the German DAX. The Euro Stoxx 50 index climbed 1.51%. Following the Fed Testimony from Ben Bernanke, EURUSD has continued on the slow trajectory higher, increasing to 1.2296.
Stronger housing data from the U.S. has buoyed sentiment among investors as they shift back to risk assets following the recent flight to quality. Soft commodities, especially sugar and rice are facing more pressure as the monsoon season continues to disappoint farmers. Sugar has ticked up 0.70% while rice is marginally stronger, rising 0.10%. Equity markets are also trading higher on the positive U.S. recovery efforts with the Hang Seng adding 1.46%. The Australian ASX and Nikkei are also stronger, gaining 1.22% and 0.75% respectively. The USD has been falling against major peers, with a -0.30% drop in USDJPY followed by a 0.24% increase in AUDUSD. NZDUSD is also higher, advancing 0.08%.
While Ben Bernanke failed to allude to further policy shifts by the U.S. Federal Reserve, the beige book survey showed the economy expanding at "modest to moderate" pace. Even though unemployment remains sticky, inflation is lower and the housing sector continues to bottom out. Housing starts rose to 760,000 from 711,000 prior, highlighting the improvement as record low mortgage rates entice buyers. Manufacturing has slowed and major sell-side analysts have further reduced GDP forecasts for the second half of 2012. The stronger data gave a boost to equities as the Nasdaq Composite rose 1.12% followed by a 0.81% gain in the Dow Jones. The S&P 500 improved by a more modest 0.67%. WTI crude oil has advanced above the $90 per barrel level on stronger growth prospects while natural gas fell -0.61%.
Disclaimer The analysis we provide is based on the average estimate of price movements in one day. Does not guarantee what we deliver is actually a proper and correct. Everything that happens in the decisions you make on your trading transaction is to be Your responsibilities.
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