By CountingPips.com
The US dollar has declined in forex trading today as positive risk taking has provided a boost to higher yielding currencies and the US stock markets. Today’s forex action has seen a reversal of yesterday’s dollar strength as the American currency has declined against the euro, British pound sterling, Australian dollar, New Zealand dollar, Canadian dollar and the Swiss franc. The dollar has traded slightly higher against the Japanese yen after reversing off a fresh low point for the week at the 86.33 exchange rate earlier today.
Strong company earnings reported for the second quarter have pushed positive risk sentiment in the markets today as AT&T, Caterpillar, 3M and UPS all surpassed their earnings forecasts.
The Dow Jones industrial average has advanced by approximately 200 points to trade over the 10,300 level today and reversing yesterday’s decline. The NASDAQ has increased by approximately 50 points or 2.3 percent so far today while the S&P 500 has risen by over 20 points to climb to the 1092.82 level. In commodities, Oil has advanced by almost 3 percent to the $78.72 per barrel level while gold has been virtually unchanged at $1191.60 per ounce.
The market’s positive mood on earnings has brushed aside the downbeat economic releases out of the US today. Weekly jobless claims increased by more than expected as of July 17th to a seasonally adjusted total of 464,000, according to the Department of Labor. This was an increase of 37,000 workers from the previous week while the four-week moving average saw an increase of 1,250 workers. The number of workers seeking continuing employment insurance as a July 10th fell by 223,000 workers to a total of 4,487,000.
US leading indicators, a measure of future economic activity, fell by 0.2 percent in June, according to the release from the Conference Board. June’s score follows a revised increased by 0.5 percent in May and did come in better than the market forecasts that were expecting a 0.3 percent decrease for the month.
US existing home sales also declined in the month of June, according to the report by the National Association of Realtors. Existing home sales fell by 5.1 percent in June to an annual rate of 5.37 million homes following a decline of 2.2 percent in May. Despite a decrease, the results were better than the market forecasters that were expecting a 9.9 percent downfall and on an annual basis, existing home sales were still 9.8 percent higher than the June 2009 sales level.
NAR chief economist Lawrence Yun commented on the sales results saying, “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”
Tomorrow’s economic news releases include the United Kingdom’s second quarter GDP report, the Canadian consumer price index and the eagerly awaited results of the European Union’s bank stress tests.