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Stocks Surged, But the Dollar Didn’t Show the Same Intraday Movement
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The week started on a positive note, as the major stock indices soared higher yesterday, accompanied by inclining volume. Even though economic data was mixed, and Bernanke tried to support the declining Dollar, investors looked past the data, extracting further profits from the recent rally.
The buying was broad based and was led by the Energy sector. Financials also helped to push the indices higher, closing with a gain of 2.29%. From a technical point of view the S&P500 managed to breach its prior high during yesterday’s session and joined the Nasdaq and the Dow Jones Industrial Average, by claiming a higher-high.
On the data front, Retail sales jumped by 1.4%, compared to an expected 1% figure, while the core figure came in under expectations. Furthermore the NY Empire State Manufacturing Index disappointed analysts, releasing a 23.50 result, compared to an expected 30.00. One must note that the NY Empire State Manufacturing Index measures the economic health of the manufacturing sector by a survey of approximately 200 manufacturers in the New York State.
The Dollar Drops then ClimbsEven though Bernanke tried to affect the Dollar yesterday, his comments had only a mild affect on the intraday session. The Fed Chairman stressed on the importance of a strong Dollar and also mentioned that the economic recovery could take longer than expected, due to the recent weakness in the financial sector and due to the employment situation. While the Chairman did mention that the U.S could see slow economic growth, he also stated that interest rates will continue to remain at low levels. Current rates are at 0%-0.25%.
On the Forex market the Dollar bounced back and forth, as the chairman’s comments had an impact, causing intraday volatility. Even though the Dollar showed relative strength, it quickly lost its steam as the comments, encouraged investors to sell the Dollar and buy higher yielding currencies.
Most of the Dollar counterparts continued higher, but closed the session with a doji candlestick. The mixed session on the Forex market, is now showing that investors remain skeptic regarding the rally going forward.
Economic Data to Watch Out ForInflation numbers will be the highlight of today’s session as England is scheduled to release its CPI figure. Furthermore the U.S will also release its manufacturing prices. The numbers are expected to show a minor improvement, but should not show inflationary pressures.
To view the full economic calendar click here.
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