Monday, 6 Jul 2009

Risk Aversion Continues to Dominate Trading

The aftermath from the release of disappointing U.S employment data continues to be felt in today's trading. The Dollar advanced against most of its currency counterparts except the Yen on renewed fears over the viability of the global economic recovery. The Dollar's advance against the EUR was intensified after Germany's IKB Deutsche Industriebank AG said it lost 580 million euros ($808 million) in the fiscal year ending March 31

The Pound was the hardest hit against the Dollar, dropping as much as 2 cents, over renewed risk aversion and fears of further quantitative easing by the Bank of England. The JPY is also greatly benefiting from renewed risk aversion among investors as the Japanese currency continues its advance against the EUR and Dollar over fears of deepening decline in corporate earning due to poor consumer consumption. The Yen is also benefiting from continued losses in world equity markets. Continued skepticism over a quick global recovery, which was exacerbated by the weak U.S employment data, continues to hurt Oil Prices. With a strong Dollar and continued losses in world equity markets, Oil prices have reached bellow $64 a barrel. A slow news day is expected today, following the long 4th of July weekend in the US markets. However, the release of the U.S ISM Non-Manufacturing PMI is expected to provide some market volatility. Weak results are likely to intensify the current trends.