The uncertainty generated by the vote in the Parliaments of Germany, France and Ireland to contribute their share of the Greek bailout has snapped the Euro’s 5 days upward trend. The EU fiscal warning to Portugal will not endear the country to bondholders when it goes in search of financing as it tries to cut down its GDP deficit to 2.8% by 2013 from 9.4% this year.
Fed chairman Ben Bernanke spoke before a Joint Economic Committee yesterday. He mainly outlined that there are still difficult choices ahed in order to cut the country’s soaring deficit. His speech was very balanced on the one hand he mentioned job losses were slowing down while on the other he was concerned about the level of long term unemployment.
The US$ is stronger in the O/N trading session. Currently it is higher against 10 of the 16 most actively traded currencies in a ‘whippy’ trading range. The USD$ is higher against the EUR -0.46%, CHF -0.39%. The JPY and GBP show very little appreciation from their levels 12 hours ago. The commodity currencies are a mixed this morning, CAD +0.08% and AUD -0.05%. The market should expect the AUD to remain better bid on any pull backs (0.9326).
Crude is lower in the O/N session ($85.68 down -16c). US Dollar strength has put downward pressure on oil, even after the EIA report pointed to a decrease of 2.2 million barrels in this week’s inventories. Technical analysts have their eye on $90 by year end.
Commodities prices could fall if the USD continues to find a foothold. Gold would lose its alternative investment status if the dollar continues its rebound USD$ ($1,154). Platinum and palladium have outperformed Gold as jewelry demand and Chinese auto industry demand have picked up. Yuan revaluation is also expected to boost gold as its price would become more attractive to Chinese buyers of the metal.
The Nikkei closed at 11,273 up +68. The DAX index in Europe was at 6,274 down -3; the FTSE (UK) currently is 5,797 up +2. The early call for the open of key US indices is higher.
Note: Dean will be away traveling for the next two week’s and will return to publication on April 29th.
