New Fed Money Drives Stocks, Precious Metals Higher
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Lack of Buyers Drives Stocks Lower; May Be Start of Something Bigger
A late session short-covering rally triggered by day-trader liquidation late in the trading session helped equity markets finish higher on Thursday. The inability to break stocks throughout the day most likely encouraged frustrated bears to cover their positions ahead of tomorrow’s important U.S. Non-Farm Payrolls Report.
Tuesday afternoon the Fed announced it was keeping its balance sheet intact while changing the composition of said balance sheet by moving out of mortgages and into long-term Treasuries. This news triggered a strong surge in the Treasury complex, sending the September Treasury Bond to a new high for the year. The move by the Fed is designed to keep the pressure on long-term rates.
More Bad Economic News Drives Dollar Lower; Fed May Renew QE
The U.S. Dollar was under pressure against most majors on Tuesday on speculation the Fed will consider renewing its quantitative easing program following next week’s FOMC meeting on August 10. Another round of weak economic data also contributed to the weakness in the Greenback which drove the Dollar to its lowest level since April against some of the currency pairs.
Worries about Economy Losing Steam Drives U.S. Dollar Lower
The U.S. Dollar is under pressure against most majors as investor concern that the U.S. economy’s recovery is losing steam drove traders into higher yielding assets. The overnight weakness in the Dollar was triggered by a better than expected economic report in Australia and a strong surge in Asian equities.
U.S. equity markets surged to the upside, taking back most of Wednesday’s loss as signs of a global economic recovery helped drive up demand for higher risk assets.
Better than expected housing data and earnings reports also contributed to today’s rally, but the majority of the buying was done overnight by aggressive Asian and European buyers.