Euro Sees Gains amid Hopes for US Budget Resolution
Risk taking in the marketplace, largely due to hopes that US budget negotiations would soon be resolved and the “fiscal cliff” of tax increases and spending cuts would be avoided, helped higher yielding assets, including the euro, gain during mid-day trading yesterday. Today, in addition to any developments in the ongoing budget negotiations, traders will want to note the result of the US Durable Goods and Core Durable Goods Orders figures, set to be released at 13:30 GMT. With both indicators forecasted to come in below last month’s results, the dollar could extend its recent losses before markets close for the weekend.
Economic News
USD – US Durable Goods Data Set to Impact Dollar Today
Hopes that the budget negotiations between US Congressional leaders and President Obama would soon be resolved caused the US dollar to fall against its riskier currency rivals yesterday. The USD/CHF fell more than 50 pips to trade as low as 0.9083 during the first part of the day. That being said, the greenback was able to see a slight upward correction following better than expected US home sales and manufacturing data, and was trading at 0.9115 by the afternoon session. Against the safe-haven JPY, the dollar was able to gain more than 40 pips over the course of the day, and was trading at 84.25 by the beginning of the US session.
Turning to today, dollar traders will want to pay attention to the US Durable Goods and Core Durable Goods figures, both scheduled to be released at 13:30 GMT. With both indicators forecasted to come in below last month’s figures, the dollar could take losses before markets close for the weekend. In addition, any positive developments in the negotiations to avoid the upcoming “fiscal cliff” of tax increases and spending cuts in the US may encourage risk taking, which would lead to bearish movement for the greenback.
EUR – Euro Reverses Gains Following Positive US News
While the euro was bullish against both the US dollar and yen for most of the European session yesterday, better than expected US home sales and manufacturing data turned the currency bearish during afternoon trading. The EUR/USD, which had gained close to 85 pips to trade as high as 1.3293, fell back to 1.3240 after the US data was released. Against the yen, the euro gained over 100 pips during the first part of the day, eventually peaking at 112.14, before dropping back to 111.61 by the beginning of the US session.
Turning to today, US “fiscal cliff” news is likely to have a significant impact on the euro. While budget negotiations between US Congressional leaders and President Obama appeared to be deadlocked earlier in the week, hopes of an impending deal yesterday led to the euro’s temporary uptrend. Any positive developments today are likely to lead to risk taking among investors, which could boost the euro before markets close for the weekend.
Gold – Gold Tumbles Following Positive US News
The price of gold tumbled close to $30 an ounce during the mid-day session yesterday to eventually reach the $1642 level, its lowest level in three-months. Analysts attributed the precious metal’s bearish movement to positive news out of the US, which led to doubts that the Fed will initiate additional monetary easing measures in the near future.
Today, gold traders will want to continue monitoring news out of the US, particularly the Core Durable Goods Orders figure at 13:30 GMT. The indicator is forecasted to come in at -0.2%, well below last month’s 1.8%. If the indicator comes in at or below the expected level, gold prices may be able to rebound during afternoon trading.
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