Forex News – Tight Ranges Ahead of the U.S. Data and the European Banks Stress... |
The rising risk aversion within the broad markets raised demand on lower yielding currencies against higher yielding ones. This brought gains to the USD and losses to other major currencies. And if confidence remains fragile, we should expect the dollar to extend its gains.
However talks about the U.S. debt ceiling continue to dominate the landscape, especially after Standard & Poor’s rating agency said there is a one-in-two chance it will cut the U.S. debt rating within three months if the government doesn’t raise the debt ceiling.
If the U.S. government doesn’t reach an agreement before August 2nd deadline, we expect the greenback to lose huge momentum against the other major currencies despite the ongoing sovereign debt saga in Europe, the global financial instability and the confusions about the global economic outlook.
Europewill release today its much awaited its stress test results. The report will give a picture about the health of the European banking system and will be released after the European markets will close. Till then caution, patience and vigilance will be much needed.
Although the effect of the stress test results wont be seen in Europe until Monday, the U.S. markets and the Forex markets will be active, therefore swift movement will most probably been seen later in the day, and markets could escape their tight ranges seen this morning.
Italypassed austerity measures on Thursday which helped ease some of the contagion worries. But this does not mean that the crisis has ended, since it could stretch for month even years to come. Europe will be light with data today with only the trade balance on schedule which proved better than expected.
Today we will witness the release of some important data from the U.S. that could leave an impact on the market sentiment. The CPI for June, the empire manufacturing for July and the consumer confidence from the University of Michigan might give mixed results.
Meanwhile, the quarterly earnings reports will continue to be released from the U.S. with Citibank scheduled for today. The dollar index is hovering around the 95.15 level as of this writing, while the euro is consolidating around the 1.4150 level and the pound around the 1.6111 level.
Gold lost its glow today after yesterday managed to reach a new record high at $1594.20 per ounce. As of this writing gold is trading with a downside bias around the $1579.45 level. Oil is trading with a downside momentum as well around the $95.55 level.
Originally posted here.
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