Wednesday, 29 Jul 2009

Dollar Advances as Equities Continue to Show Losses

The Dollar index rose to 79.576 today, up from 78.863 Tuesday as stocks plunged and Cruse Oil prices fell, boosting demand for the Dollar as a safe haven currency. The driving forces behind the market movements are equities and risk sentiment. The latter was dampened today following a report from the Commerce Department that stated orders for durable goods in the U.S fell 2.5% in June, first decline in 3 months. The result was much worse than the expected 0.6% predicted by economist.

The EUR fell to an intraday low of $1.4007 against the Dollar today, following a drop in U.S. stocks that further ate away at investors' risk appetite for higher yielding currencies. The Pound was also hurt by the drop in equities, hitting a low of 1.6347 for today.

Oil futures slid over $4 to trade below $63 a barrel in recent action in New York, after U.S. inventory data showed a surprisingly large increase in stockpiles. Concerns over a prolonged feeble demand in the U.S and China, the world's two biggest consumers of Oil, also put pressure on Oil prices.

Looking ahead to tomorrow Unemployment will be the main economic indicator with releases of the German Unemployment Change at 7:55 GMT and the U.S Unemployment Claims at 12:30 GMT. The release of the British HPI at 6:00 GMT is also likely to cause market volatility.