The USD index, which measure the value of the USD against several currencies has slid once again as we see several currencies gains strength against the dollar. Commodity currencies are doing the biggest damage, with the AUDUSD making new highs, breaching 0.7800, the USDCAD has peeked below this year’s lows at 1.2744 and the NZDUSD is pushing deeper into the 0.7000`s. Majors are also strengthening against the USD with the GBP doing most of the damage as we see 1.4350 being traded, while the EURUSD pushes closer to the 1.1350 mark.
Global equities are enjoying the return of a healthy risk appetite and we saw Wall Street close in the green with the DJIA finishing up 0.58%, the S&P 500 finishing up 0.65% and the NASDAQ gaining 0.58%. Asian equities followed wall Street’s gains and added some of their owns after oil prices were revived, so much so that we saw gains of 3.4% n the Nikkei, gains of 1% in the ASX 200 and a higher shanghai composite, which was slightly capped by the markets speculating that the PBoC would be more prudent with its monetary policy going forward.
Crude prices rose through out yesterday and peaked in the Asian session where traders took profits capping gains to 40 USD. As it stands oil prices and risk sentiment will remain sensitive to news headlines as markets look for releases from various OPEC and non-OPEC members as to their stand regarding the failed Doha talks. Recent releases suggest that crude is due for a sell off after yesterday’s impressive gains, as we see blame being assigned for the failed meeting and members sighting that “trust has been broken” along with Kuwaits resumption of oil production after a brief stall yesterday due to a strike.
Though the dollar has seen better days, it is still regarded as the king currency and with so much global uncertainty regarding energy prices and various takes on monetary policy from its counterparts, who face their own problems, it won’t take much for the USD to bounce back. Besides data out of the US its self, in the form of Building Permits and Housing Starts, expected at 1.2M and 1.17M respectively, we also see three Central Bank Governors due to take the stand today and all will have an eye on their own currencies appreciating too much against the USD as they try and keep their respective countries competitive edge alive. The Governors due to speak are the RBA`s Stevens, the BOE`s Carney and the BOC`s Poloz. Any dovish comments or mentions of their respective currencies being over valued will see the USD index quickly recover.