China Raises Reserve Requirement; Bernanke Hits Back at Critics
Demand for risky assets fell overnight after China raised its bank reserve requirements by 50 basis points. This action sent worries throughout the market that perhaps the Chinese economy was heating up too rapidly. The move is expected to keep growth under wraps.
Investors backed out of risky stocks and commodities on the news, pressuring the Australian, New Zealand and Canadian Dollars.
Dollar Falls against Most Majors; Risk appears to be Back On
The U.S. Dollar fell against most major currencies in overnight trading as investor appetite for risk increased while tensions over Irish debt issues eased. Pressure increased on the Dollar amid optimism that a bailout for Ireland will prevent contagion across the Euro region’s debt markets.
Strong Overnight Dollar Rally indicates Risk Aversion is Back On
Stock Traders Put European Debt Issues Back on Forefront
The U.S. Dollar is strengthening this morning after the Bank of Japan decided to invoke an emergency easing plan. The BoJ avoided an intervention but instead decided to provide liquidity in an attempt to weaken its currency. The plan includes expanding its current 20 trillion Yen quantitative easing program to six-months from its current three-month time frame.
Risk Appears to be Back On Ahead of Next Week’s U.S. Employment Report
Stocks Giving Back Some Gains; Could Be Too Much Too Fast
The early call is for a lower opening on Wall Street this morning, in what appears to be profit-taking or position evening ahead of the start of earning’s season next week. Unless the market gets a jolt from a much better than expected Wholesale Trade or Inventories report today, I’m looking for the stock indices to remain rangebound, very similar to Thursday’s sluggish intraday action.