USD Graphic Rewind 07.08
USD INDEX GRAPHIC REWIND
The dollar found itself under intense pressure for most of the day yesterday, pushing the index sharply lower. As mentioned yesterday price action direction was uncertain and subject to change quickly, which is exactly what we saw happen. On the back of comments by State Street, who expect to beat earnings expectations, market sentiment turned optimistic on the upcoming Q2 earnings season, particularly for the financial sector. The major US indexes rallied almost 3% a-piece the third-biggest single day gains in 2010 pushing the Dow to close above 10k for the first time since June 28. This risk-on sentiment continued into Asian trade, which saw traders shrug-off weak Japanese data and push equities and higher-yielding FX higher, largely at the cost of the dollar and yen.
Looking ahead, a couple important events on the calender in the form of BoE and ECB rate decisions but with little market expectation for any surprises in either. If the positive sentiment can find some new props today in European and US trade we may see a much needed correction higher playing out through the last few sessions of the week.
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