The AUD USD rose sharply overnight, negating Monday’s closing price reversal top on prospects global growth will boost demand for commodities. Trader sentiment has rapidly shifted toward risk as the markets appear to have absorbed the potentially bearish situations in Japan and the Middle East.
Bullish Australian, China Economic News Boosts Equities
Improving Economic Outlook Boosts Euro, British Pound
Improved Outlook for Earnings Boosts U.S. Equities
Demand for Higher Risk; Bullish Outlook for Economy Boosts Stocks
Demand for higher risk assets and a bullish outlook for the economy helped drive U.S. equity prices higher on Monday. Stocks opened higher and held on to gains after getting a boost from better than expected ISM Non-Manufacturing data and an unexpected positive change in pending home sales.
Report that Germany May Buy Greek Bonds Boosts EUR USD
The Euro rallied on Friday after Bloomberg reported that Germany may buy Greek bonds. Shorts read this as a potential vote of confidence for Greece and used the news as an excuse to cover positions. The strong rally put the EUR USD in a position to turn the main trend to up on a rally through the last main top at 1.3692.
Concerns about Slowdown in Chinese Economy Boosts U.S. Dollar
The U.S. Dollar is trading higher against a basket of currencies as traders seem to have taken risk out of the equation. Earlier in the week, China announced measures to tighten up bank lending requirements. This is raising concerns that China’s economy may slowdown, thus decreasing demand for commodities and other higher risk assets.