Thursday, 12 May 2011

Euro Bounces Higher in New York Trading Session

During the New York trading session the dollar failed to hold most of its earlier gains versus the euro and the dollar bloc. The exception to this price action was the pound which was stagnant versus the dollar. US retail sales numbers were released but did not meet market expectations and were largely brushed off by traders.

Today the US advanced retail sales m/m in April numbers rose 0.5%, up from a revised report in March of 0.9%. Market expectations were for an increase of 0.6%. While the numbers failed to meet market forecasts, the tone of the markets noticeably changed with the euro coming off of its daily lows.

The EUR/USD received a bounce today in afternoon trading, rising as high as 1.4268 from the overnight lows at 1.4123. The dollar bloc was stronger as the AUD/USD fell as low as 1.0566 only to climb higher to trade at 1.0660. The NZD/USD dropped to 0.7840 before rising as high as 0.7986.

Sterling was weaker across the board with the USD/GBP coming off of its low of 1.6233 to 1.6290. However, the new low made by Sterling is telling. Despite yesterday's pledge by the Bank of England to raise interest rates in the third quarter, the market's reaction to the news is indicative of traders' expectations for a slower than announced schedule of interest rate hikes.

An increase in margin requirements by the CME initially spurred the selling of silver and the commodity continues to be sold off from its high of $47.83 by 28%. Silver prices today found a bounce at the rising trend line off of the late August low, though the price is still down for the day at $34.15.