Bank of England Stays the Course; Rates Expected to Stay Low Until Q4
As foretold on Monday, U.S. equity indices finished flat for the week. Although there were some sizeable swings triggered by news stories and speculation, for the most part, investors were not willing to take a position in front of next week’s Federal Open Market Committee Meeting.
The scenario for next week is simple in my opinion. Maximum liquidity is bullish.
The dollar dropped to a 15-year low against the yen
E-mini S&P 500 Holds 1037.00 Overnight; Is This the Line in the Sand?
One debate that will go on this week centers on the Fed. One question traders are asking, “Is the Fed out of bullets?” All signs point out that the government’s stimulus plans as well as the Fed’s activity have done nothing to stimulate the economy. The housing market is bad despite mortgage rates below 5%. Unemployment is high and expected to rise.
Stocks Wipe Out Weekly Gains; Possible Reversal Top in the Making
U.S. Dollar weakens as Investors put Risk Back on the Table
The U.S. Dollar finished the day down against most major currencies with the exception of the Japanese Yen. Low volume ahead of Friday’s U.S. Employment report may have contributed to the weakness in the Dollar as traders threw their support into the higher-risk, commodity-linked currencies after the thinly traded equity markets posted strong gains.
The Euro continued its slide on Tuesday and signs are developing that indicate the problem is with the European Union and not the Euro. The market seems to be content with the weakness in the Euro. It’s the inability of the European Union to act as a cohesive unit that makes traders feel that a breakup may be coming.
British Pound finishes Higher; Election Compromise in the Works
The GBP USD opened higher driven by spillover buying from the Euro, but by mid-session was trading well off its high. The initial rally was triggered by the possibility that the two major political parties - Labour and Conservative - were working together to map a plan for a balanced budget despite the possibility of a hung parliament.