Friday, 10 Jul 2009

Poor U.S Consumer Confidence Data Boosts USD and JPY

After Thursday's brief return to risk appetite, today's trading is again dominated by risk aversion with the JPY and USD gaining broadly against their major currency counterparts.

The trend intensified after confidence among U.S consumers fell for the first time in 4 months over increased unemployment and higher gasoline prices. The Reuters/University of Michigan index of consumer sentiment slid to 64.6 from 70.8 last month. The deeper than estimate drop in consumer confidence also contributed to a slide in equities which contributed even further to renewed risk aversion.

The drop in the stock market as well as the Dollar's continuing strength is putting strong downward pressure on Oil prices. After a slight up turn yesterday, Crude Oil intensified its decline, trading near $59 a barrel.

With the expectation of U.S second quarter earnings release next week as well as several major economic data, traders are likely to remain cautions heading to next week; therefore, it is unlikely to see a major reversal in the current bullish trends of the USD and JPY.