The dollar mostly flat behind another surge in equities as the recent trend trading based on extreme risk aversion may be starting to diverge. The EurUsd fell 48 pips to the mid‐range of 1.28, while the UsdJpy rose over 100 pips to 98.60. The GbpUsd experienced losses putting the pair back below 1.64 at the mid 1.63 level. Equity markets soared nearly 200 pts on the Dow adding to an exceptionally strong week of trading. European stocks held ground with both the DAX and the FTSE higher by 1%. Bond yields increased 4bps on the 2yr and 11bps on the 10yr, which is common when risk appetite rises. Commodities were mixed with oil at $65bbl and gold at $739oz, which is evidence that risk aversion trade may be breaking apart considering the gains in equities.

Eurozone consumer confidence came in worst than expected at ‐24 vs. the consensus figure of ‐20. In addition, the business climate indicator deteriorated to ‐1.34 vs. the prior reading of ‐0.79. This data is consistent with weakening economic growth as producers and consumers alike are bracing for a serious slowdown. Data out of the UK was light, but the Sterling will probably fall further if Gfk consumer confidence declines more than estimated. US GDP dropped to ‐0.3%, which was better than projected but still negative. The appreciation in the dollar had an adverse effect on exports, and thus lowered overall GDP. Despite negative growth, the US financial markets were resilient in today’s session as investors and Traders continue to evaluate their risk tolerance.

ACM Forex
Advanced Currency Markets