Higher

On Tuesday, the Federal Reserve left its benchmark interest rate unchanged and reiterated that interest rates would remain low for “an extended period”. In its statement, it also mentioned that inflation remains subdued, and that the weak employment situation seems to have stabilized.

Earlier this afternoon, the Federal Reserve left its benchmark interest rate unchanged and reiterated that interest rates would remain low for “an extended period”. In its statement, it also mentioned that inflation remains subdued, and that the weak employment situation seems to have stabilized.

The Euro closed the week higher and in a position to continue the rally as financial tensions have eased enough in Greece to warrant the beginning of a short-covering rally. Technically, the main trend is up on the daily chart with 1.4009 a possible near-term target.

U.S. equity markets finished higher after showing the first sign of volatility in several weeks. After a strong early session rally, selling pressure hit the market after the March E-mini S&P 500 failed to attract buyers after reaching its high for the year at 1148.00.

The U.S. Dollar was mixed in light trading at the close in an unusual day as the normal correlations between the Dollar, gold and equities at times were not working. The lack of major U.S. economic reports this week is still influencing the trade although this will change with Thursday’s Weekly Initial Jobs Claims Report.

U.S. stocks finished higher despite a shift in sentiment toward less risky assets. For most of the day, the indices traded inside of a tight range on low volume. Traders kept a lid on gains and a floor on losses ahead of Friday’s U.S. Non-Farm Payrolls Report.

Concerns about sovereign debt issues in Greece eased overnight helping to increase demand for higher risk assets. In addition, good economic news from Japan and higher stock markets in Asia helped increase optimism over the global economic recovery.

Confidence that the Greek budget deficit problem may be improving helped to drive up demand for risky assets. This helped to boost U.S. stock indices. Traders were also becoming more confident about improvements in future corporate earnings because of the recent improvements in the economy.

All three major stock indices finished the day sharply higher after earlier weakness driven by a possible pact between the EU and Greece and better than expected weekly jobs data.

U.S. stock markets are trading sharply higher at the mid-session, driven by reports that the Greek sovereign debt problems will be resolved shortly. Stock investors are driving up stocks across the board as confidence is being restored to the markets. Bargain hunters have also stepping in to take advantage of lower priced equities.

The EUR USD finished the day up sharply but backed off its high as traders took a cautious trading approach after several weeks of declines. Short-covering drove this market up on speculation that the European Union had reached a tentative agreement to provide loan guarantees to deficit-riddled Greece. Traders remain nervous about the outcome of the possible agreement.

Stronger economic data this morning helped drive shorts out of the Dollar and triggered a surge to the upside which put the U.S. Dollar Index in a position to post a six-month high.

April Gold surged for the third consecutive day fueled by a combination of oversold conditions and a weaker Dollar. After failing to attract fresh selling pressure following the break under the December bottom at $1076.50, this market has formed a support base. Tuesday’s rally helped form a new main bottom at $1073.20.

U.S. equity markets rallied late in the session to close above key retracement points as traders set aside their recent worries and returned from the sidelines. The markets opened firm then surged to the upside following a better than expected U.S. manufacturing report. Good news from the consumer side also helped to support the rally.

The U.S. Dollar closed out the month of January sharply higher as aggressive buyers helped the Greenback surge to the upside following Friday morning’s better than expected U.S. GDP report. The report which blew out forecasts encouraged traders to buy with both hands as investor sentiment turned more optimistic toward a strong U.S. economic recovery.