Sydney (19/10/10) – Wall Street was bolstered by strong corporate earnings on Monday with the Dow Jones index rising 80 points. Opening relatively weaker, the market rose off the back of renewed economic sentiment and stronger than expected home building confidence figures. Breaking a five month losing streak, traders were optimistic on the economic outlook. On the corporate front, Citigroup announced a $2.1 billion revenue for the period with the company highlighting a decrease in credit write downs and provisions. The revenue figure was slightly below forecasts, however analyst noted the difficult trading conditions during the period. IBM also released earnings during the session, with a rise in operating profit’s and hardware sales. Although the result was solid, the market factored in administrative costs and noted the increasingly difficult conditions in the sector. IBM in after hours trading was 3% lower at $138.50. Technology company Apple announced better than expected earnings, with iPad and iPhone sales helping the company. Recording a 27% jump in revenues, Apple noted the strong demand for Mac Computers with 3.8 million sold. On the commodities front, Gold was slightly weaker with the precious commodity hitting resistance at $1370. Light Crude Oil futures tracked the general market sentiment with a 2.25% upside move to $83.01 a barrel. The Volatility Index was relatively unchanged at 19.09.
USDJPY>> Monday saw the yen fall into a relatively tight range with the pair trading at 81.20 at lunch. Testing support at 80.8 on Friday, leading Japanese analysts have highlighted the potential impact of a sustained weaker US dollar and the current situation in the services sectors. Consumer sales and demand for key services fell for the previous period. Economists predict that the BOJ will step into the currency markets fairly shortly to stabilise the yen.
AUDUSD>> Traders are awaiting important RBA minutes that will highlight the direction of interest rates and the general economy. Released on Tuesday this week, the AUDUSD traded at 0.9865 during the lunch session. Touching parity on Friday, the volatility in the currency pair has steadily grown over the last few weeks, with economic uncertainty in the US, and high yield differential cited as contributing factors.
EURUSD>> The Euro weakened against the dollar on Monday with the currency pair trading at 1.38937. Following the broad based market sentiment, traders moved away from risk appetite and waited for US equity market leads. Euro zone powerhouse, Germany is expected to release sentiment figures tomorrow, with speculation that the figure could fall below economists expectations.
USDCHF>>The swiss franc was weaker against the greenback, with comments from the OECD pushing the USD higher intraday. Highlighting that the swiss franc was one of the most overvalued major currencies based on PPP, the OECD was cautious on its long term estimates. Traders crystallised positions, sending the greenback higher. The USDCHF traded at 0.9585.
GBPUSD>>Cable started the week on a negative note with the currency pair trading at 1.58890. Recent weakness in the greenback and heightened concern over the European and British economies helped the USD rise.
USDCAD>>Traders moved away from the Canadian dollar on Monday with risk aversion and global economic uncertainty cited. The recent rise of the CAD has been broadly based on commodity movements and Canadian GDP growth. The USDCAD traded at 1.02041.
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