Stocks fall as Traders Seek Safe-Haven Investments
U.S. stock markets traded hard to downside on Thursday fueled by fears of a financial crisis in the Euro Zone. Stocks began their sell-off last night following a downgrade of Greece’s debt by the S&P credit rating service. The markets accelerated to the downside shortly after the U.S. opening partly on a higher then expected initial claims figure.
Equity Markets Weaken as Greece Downgrades Spooks Traders
U.S. stock markets are expected to open lower based on weaker markets overnight. Traders are taking risky positions off the table in response to another debt rating downgrade of Greece. Traders now fear that the debt crisis could worsen in the Euro Zone and perhaps spread to U.S. banks. This news is triggering a rally in the Dollar and subsequent weakness in the U.S. equity markets.
Equities are holding firm overnight ahead of the Fed’s policy statement. Traders want to see indications that the Fed sees improvements in the economy. At the same time, they don’t want to see higher interest rates. This sets up the possibility of a choppy two-sided trade following the release of the FOMC statement.
The U.S. Dollar is trading softer overnight as traders reduced long positions ahead of today’s Federal Open Market Committee meeting.
The Fed is expected to leave its benchmark interest rate at 0.25%; the argument is whether it will alter the language its policy statement to represent positive changes in the U.S. economy.
Dollar Traders Betting on Hawkish Comment from Fed
Equity Traders Look for Higher Opening as Dubai Concerns Subside
U.S. Dollar Falls as Traders Downplay Dubai Concerns
The U.S. Dollar is declining overnight as speculators are downplaying the debt problems in Dubai. Over the week-end, the United Arab Emirates central bank said it “stands behind” the country’s lenders. This helped to ease concerns that the state owned Dubai World will default on its debt. Traders now believe that this is a local economic problem rather than one with global ramifications.
Dollar Plunges as Traders React to Fed Minutes; RBA Comments
The Dollar is trading slightly better as traders await this morning’s U.S. 3rd Quarter GDP Report. The report is expected to show a decrease from the previous estimate. Previously the report showed an increase of 3.5% which some economists thought was too high. Today’s report is expected to show growth of 2.8%.
Equity Markets Soften as Traders Reevaluate Long Positions
U.S. equity markets followed the lead of lower Asian and European markets today and sold off sharply from the get-go. U.S. investors are concerned that the weak condition of the economy cannot support stock prices at such lofty levels. Some investors say that the current break is setting up another buying opportunity.