Wednesday, 21 Oct 2009

Oil and Gold Trading Higher as Dollar Breaks 1.5000

This afternoon the euro jumped out past the significant 1.5000 price level as earnings from Wall Street's financial giants topped analyst's predictions, fueling a sell off of the dollar. U.S. equity markets rose on better than expected corporate earnings, giving traders an incentive to dump the dollar for riskier assets.

The Pound continued its bullish run, trading significantly higher against the dollar as traders believe the Bank of England may soon drop its policy of buying debentures to boost liquidity in the financial markets. This program was implemented during the height of the financial crisis as the bank feared a liquidity issue in the financial markets. The Pound was up 1.4%, trading at 1.6617.

The price of crude also jumped above $80, rising to a level just short of $82 as falling levels of gasoline inventories set off a buying binge and was influenced by a weaker dollar. Gas stocks dropped 2.2M barrels. This was significantly higher than analyst's forecasts of an 800K reduction. Crude oil is currently trading at $81 after beginning the day at $78.68.

Spot gold also pushed higher as trading for the commodity followed its reverse correlation with the slumping dollar. Gold reached a daily high of $1064.50 and may be preparing for a run at $1070 by the week's end.