Dollar Bulls Sustain Positive Momentum

The Usd carried its recent rally into today's trading with stable movement to the upside in the early session. The EurUsd fell over 150 pips to 1.46, while the UsdJpy rose substantially trading through previous resistance to 110. The GbpUsd experienced losses, trading down over 70 pips to 1.86, based primarily on the bearish sentiment regarding the UK economy. Equity markets closed marginally higher in the US, and mostly flat in Europe. Traders remained neutral in anticipation of further clarity regarding the outlook of the global economic situation. The yield curve is normal with long term rates higher then short term rates, thus implying higher inflation but a positive sentiment regarding the health of financial markets. Commodity prices slid, with oil in particular falling to 112 and gold at 787. Currency markets remain volatile, which is the central reason for the recent price swings we've seen across the majors.

The Empire Manufacturing data came in surprisingly better than expected at 2.8 vs. -4.0, in addition industrial production rose 0.2% vs. 0.0% exp. Michigan Consumer Confidence came in slightly lower than the consensus figure of 62, but higher than the previous reading at 61.7. The recent economic data is representative of a slow shift in the trend of economic news out of the US. Traders have already begun to position themselves as 1 month implied volatility rose to 10.93 on the EurUsd, which has experienced several trading sessions of price movements in excess of 100 pips. We are likely to see a similar level of volatility in coming weeks as the market determines the true price of oil, as well as, the likelihood the Fed will raise rates. We remain bullish on the Usd going into the end of the year, with the possibility of a slight retraction based on speculation of what direction monetary policy in the next quarter.

AC Markets
http://www.ac-markets.com

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