The U.S. Dollar is expected to open lower against most major currencies after failing to hold on to overnight gains from the Asian session.
Shortly before the New York opening, investors seem a little reluctant to be short the Greenback as finance ministers from the Group of 20 nations meet in South Korea.
The Australian Dollar recovered on Tuesday after an early setback. The Aussie was pressured overnight following a sell-off triggered by the surprise news that the central bank passed on another interest rate hike.
The Aussie erased losses against the U.S. Dollar after demand for higher-yielding assets soared, sending commodity and equity prices higher.
The Euro is under pressure this morning following reports of a leak in the release of the European bank stress test data which was originally scheduled to be revealed on Friday. The leaks revealed that Spanish and Greek banks are expected to pass the tests which raised concerns among investors about the stringency of the tests.
Euro Pressured Early but Settles into Range on Slow News Day
Lower Asian and European equity markets overnight triggered a break in the Euro early in the session, but stable U.S. stock markets helped to hold it in a range most of the New York session.
Without any major economic reports to push the markets around, traders have decided to focus on two elements: the start of U.S. earnings season and the European bank stress results.
U.S. Retail Sales and Consumer Sentiment Likely to Dictate Early Stock Movement
U.S. equity markets are trading flat to better several hours before the New York session opening, but this could change because of the release of the U.S. Retail Sales Report. This report which is due out at 7:30 a.m. central is expected to show an increase of 0.2% versus the prior month’s gain of 0.4%.
On Sunday night, the Euro broke through the “Lehman Low” at 1.2319 running stops and encouraging fresh selling in the process as the market dropped to 1.2233. Although there is a slight short-covering rally shortly before the New York session, most traders believe this rally will be used to attract more selling pressure.
Euro Reverses after Early Weakness; Trichet Comments Create Optimism
Today U.S. Equity Markets weakened after Early Surge
U.S. equity markets finished down on Friday and barely avoided a closing price reversal top which would have signaled the start of a possible retracement to the downside. The March E-mini S&P 500 and NASDAQ made new highs for the year while all three indices closed higher for the week. Friday saw the indices spike higher then break lower following a better than expected U.S. Retail Sales Report.
Strong selling pressure from Europe and Asia put pressure on the U.S. Dollar early in the trading session. After early New York session weakness plunged the Dollar Futures Index toward last week’s low at 74.75, shorts began covering their positions when the U.S. reported better than expected existing home sales.