Dollar dips in late day risk rally

The U.S. dollar erased earlier gains, tumbling against all of the G10 except the Japanese yen, and the euro firmed on reports that EU officials may be coordinating a bank rescue. Though the news gave a boost to risk sentiment, we remain skeptical that this will materialize into a longer term solution for the sovereign debt crisis as coordination by EU officials has proved very difficult in the past. The euro advanced with EUR/USD rising above 1.3300 as traders covered short positions. The pair may find resistance around a long term horizontal pivot which comes in around the 1.3425-50 area.

Testimony by Fed Chairman Bernanke earlier in the session resulted in a brief bounce in equities as he said that the Fed is ‘prepared to take further action as appropriate’. The comments fueled speculation of additional easing but the markets appeared to focus more on the weak outlook for the economy as Bernanke said that the recovery is ‘close to faltering’ which weighed on sentiment.

U.S. equities had a rollercoaster ride and spiked higher to close out the session near the highs of the day. The Dow Jones Industrial Average ultimately closed to the upside by about +1.44% after being down over 200 points earlier in the day and the S&P finished higher by around +2.24%. Commodities were softer with the precious metals gold and silver down by -2.35% and -1.39% respectively. WTI crude is down slightly by about -0.62% at time of writing.

There was little economic data with just U.S. August factory orders released which showed a decline of -0.2% (prior +2.1%) while the market was expecting no change. The details of the number showed an increase in orders for capital goods while demand for consumer goods fell.

There is relatively light data flow for the upcoming Asia/Pacific session with only Australian retail sales for August and the September AiG performance of service index.

Источник: Forex.com

04.10.2011