Draghi comments drive short squeeze

The dollar was significantly lower against most of its major counterparts except for the Japanese yen after European Central Bank (ECB) President Mario Draghi pledged action. Draghi said that the bank will do whatever is needed to preserve the euro and added “believe me, it will be enough”. Markets welcomed the comments and the recent decline in risk sentiment saw a sharp rebound. EU sovereign yields1 were lower across the board with Spanish 10-year yields1 tumbling by about -45bps to fall below 7%. Global equities were broadly higher, UST yields1 advanced across the curve, and risk currencies saw a short squeeze while safe havens – USD and JPY – declined. EUR/USD rose above the 1.23 figure to test the 21-day simple moving average which appears to be holding as resistance for now as the pair has settled back around the 1.2280 zone at time of writing.

Economic data in the U.S. was mixed with better than expected weekly jobless claims and an unexpected drop in core durable goods orders. Initial jobless claims fell by 35k to 353k from the prior week’s 388k and the 4-week moving average dropped by 8.7k to 367k. This was the fifth consecutive decline in the 4-week MA, a sign that the labor market is slowly moving in the right direction. Headline durable goods orders rose by more than forecast with a +1.6% increase in June (cons. +0.3%), however this was largely attributed to transportation as durables excluding transportation surprisingly fell by -1.1% (cons. +0.1%). June housing data continued to disappoint with a -1.4% m/m drop in pending home sales (cons. +0.3%).

U.S. equities surged on expectations that supportive central bank action will soon come. The Dow Jones Industrial Average1 rallied to finish the day up by about +1.67% and the S&P 5001 advanced to close out the day by around +1.65%. Commodities firmed on the back of a weaker dollar with gold, silver, and oil1 currently up by +0.76%, +0.64%, and +0.54% respectively.

Japanese retail sales as well as national and Tokyo inflation data are due out of the Asia/Pacific tonight.

Источник: Forex.com

26.07.2012