TODAY Oct 17 -2012 FOREX IN REVIEWS

As the two-day Euro Summit rapidly approaches, optimism is high that Spain is strongly considering bailout measures. Moody's reaffirmed its credit rating of Spain citing the willingness of the ECB to buy debt even if the nation is shut off from the credit markets. Mariano Rajoy is choosing to play a game of chicken with the ECB to ensure that he gets the best terms and conditions possible from his Euro peers in return for shorting up the Spanish economy. EURUSD climbed to a one-month high of 1.3125 before retracing to 1.3090. Equity indices soared higher, led by the 3.41% rally in the Spanish IBEX. The Italian MIB and Euro Stoxx 50 were notably higher, climbing 2.53% each.

Asian stocks are carrying over the strength from the American and European sessions as renewed optimism that the sovereign debt crisis will be contained propels markets higher. Industrial metals are pushing higher after the American data and helping to push the Aussie dollar to a two-week high against the dollar as government spending cuts have boosted confidence in the Australian government. AUDUSD has ticked up 0.31% to 1.0308 while meanwhile the Yen has strengthened off the back of Nikkei strength, with USDJPY tumbling -0.28% to 78.670. NZDUSD has climbed 0.42% to 0.8176. The Nikkei is leading peers higher, rising 1.47% followed by a 0.96% gain in the Hang Seng and 0.88% increase in the Australian ASX.

American markets rallied after industrial production results beat both expectations and the prior months figure, rising to 0.40% month over month. This coupled with Spanish bailout rumors led traders to move into risk assets with NYSE short interest dropping to a 5-month low. Earnings season is well underway with mixed results coming from the banking sector while the tech sector is forecast to weaken as the outlook is very uncertain. Commodities have soared on the better industrial figures with WTI crude oil adding 0.12% to $92.20 per barrel. Gold has also risen back above the $1750 handle to $1753. Equity indices were green across the board as the Nasdaq rallied1.21% followed by a 1.03% rise in the S&P 500. The Dow Jones lagged peers slightly, strengthening 0.95%.
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