Risk Appetite Lifted Up By Strong Economic Data Of US

Wednesday, June 2, 2010

In US session as the risk appetite is lifted up by the strong economic data of US that makes the USD to get reversed earlier in the Forex online trading market. It is seen in the market that the manufacturing index of ISM is dropped to 59.7 point from the high level of 60.4 in the month of May. but, it can be said that it seems to be better than the expected rate of the market. Also it gets the achievement of the expansion reading steadiness from the ten consecutive months. since May 2004 it was noticed that the employment component details are also solid and now the details reaches to the high level of 59.8 which provides a ray of hope to the non-farm payroll reading. There was a solid increment is noticed in the exports that is of 62 level, it is the highest level seen after December 1988.

There was a rebound is seen in the DOW and crude oil after the mid-day that is the DOW drops-down to 10038 level where as the crude oil seems to fall to the 71.64 level. USD index got the resistance at the level of 87.46 where as it rebounds after reaching the low of 86.5. Sterling was the biggest hit of Yesterday as it reaches to the highest level because of the fall of the Asian AIG Prudential's takeover. This news not only boosted the Sterling but it also favors the UK stocks as the rise is also seen in the stocks. The UK rise also supports the pound. As we have noticed from the past 16 years PMI manufacturing data remains unchanged from the high level of 58. There was a rise in home prices of 8.5 percent is shown in this year earlier and it is also said by the experts of the market that it is the first time from the past September 2007 a fastest pace is seen in the home prices.

EURO gets a hit in early yesterday as the ECB presents its financial report which acknowledges that the banks are already made a significant improvements as per their financial condition. But still there are 2 important factors that may hurts the financial stability of the market. The first factor is the intensification of public finances and second is the possibility of the obstinate between the public finances and financial sector. These two factors is expected to cause a disorder in the financial situation of the market. Unemployment rate of euro zone countries seems to rise up by 12 year high where as Germany unemployment falls to 7.7 percent in the month of May. While there is a rebound shown by the euro after getting support from the stocks.

Bank of Canada rises the rate yesterday from 25 bps to 0.5 percent as it was the first G7 Central bank that have tighten their policies after the recession period. As this was expected by the market earlier times. The euro zone debt crisis leads to the uncertainty in the market but we have to remain cautious about the Global economic market after the rate hike of 0.5 percent. In early times the RBA makes the decision to hold its rate hike because of the continuous fall of euro currency due to the sovereign debt crisis. RBA only mentioned that the current monetary policies are decorous can bring rate hikes to an average situation. RBA has taken a "pause" from the May month but at that time it was predicted that it will give some good results for June hike but after observing the current situation the RBA again takes a decision for a pause in rate hike.

Dollar index sharp rebound of yesterday suggested that the combinations are still in the progress to reach a high of 87.46. The investors are still expecting the resistance hold at the level 87.46 and expected to again reach the high of 89.62 that was the high of 2009 year. GBP/CAD also rebounds and reaches the level of 1.4831 is now resuming. This rise is seen in the currency pair due to the strength gained by the Canadian Dollar and the support given to the pound from the stocks. These all things supported the currency pairs to rebound from their lows and reaches to the high position in the Forex market.

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