Stock markets advanced on Wednesday and Thursday morning, while Treasuries snapped three days of losses as investors weighed what Federal Reserve Chairman Ben Bernanke will do to support economic growth. However there are worries that the Fed head may disappoint stock investors betting on a commitment to step up stimulus. All major European, US and Asian stock indices registered broad gains, while gold prices’ record surge came to an abrupt halt on Wednesday as investors piled out of the metal, driving prices down by about 9%. Gold fell below 1730 dollars per troy ounce in Asian trading today. In foreign exchange markets the US dollar strengthened yesterday against the majority of its counterparts, including the Swiss franc and the Japanese yen.
US Dollar
The dollar showed mainly positive dynamics yesterday. Economic data from the USA yesterday showed that orders for durable goods climbed more than economists previously estimated, while a report tomorrow may show the economy grew less last quarter than it was predicted. Orders for durables rose by 4% in July, the most in four months, after falling a revised 1.3% in June. Orders for durables excluding transportation also advanced by 0.7%, in comparison with a predicted drop by 0.5%. Home prices in the US fell by 5.9% in the second quarter from a year earlier, the biggest decline since 2009. In June, prices retreated by 4.3% from a year earlier, while increasing 0.9% from the previous month. Today we do not expect a lot of important data. The Labor Department may report that initial jobless claims were little changed last week declining to 405000 from 408000, according to preliminary estimations. The dollar index, which tracks the unit against a set of six currencies, rose slightly yesterday above the level of 74 after falling to 73.57 on Tuesday.
Euro
The euro fell yesterday against the greenback, but the currency is still traded close to 1.44, as German business confidence fell to the lowest in more than a year amid global slowdown and Europe’s debt crisis, which damped the outlook for economic growth. The IFO Institute said its business climate index, based on a survey of 7000 executives, dropped in August to the lowest since June 2010 – 108.7 from 112.9 in July. At the same time both current assessment and expectations of business turned out to be significantly lower than the forecasts. Another report also revealed a drop in the annual growth pace of new euro zone’s industrial orders to 11.1% in June from 13.8%. A report by the market research company GfK, based on consumer interviews about spending, inflation and economic expectations, showed today that German consumer confidence will drop in September: the index fell to 5.2 from 5.3. The single currency remains in tight ranges with a lack of favorable economic data and an absence of decisive measures from policymakers against the crisis. According to Bloomberg, European Union lawmakers will discuss next week with finance departments heads possible steps to manage the debt crisis and the attendance of the European Central Bank President Jean-Claude Trichet is also expected. Pair EUR/USD traded in Asian trading hours today in a tight range 1.4389-1.4425.
