The increased risk appetite has hurt the greenback today fueling buying in the equities market causing selling off in US treasuries causing damage to the greenback from another side which caused weakness even versus the Japanese which was well-known as the first loser of the carry trades unwinding but this selling off beside the very low interest rate of the greenback too which stands below .25% could drag this property from the Japanese yen too. The technical breaking out of 1.372 single currency versus greenback has caused further stop loss orders triggering increasing the momentum of the greenback selling. The single currency could jump 1.3794 with first touch of 1.372. The European equities market are still following the current US bullish sentiment encouraged by the recent Germane ZEW release which came in a promising optimistic way above the market expectations of 10 at 31.1 in May. This release is still giving a potential underpinning to the single currency shrugging off the recent EU GDP Flash reading of the first quarter which reached 4.6% and weighed on the single currency at the closing of last week and the beginning of this week too.
The lost confidence in the greenback holding could support the gold which was already underpinned as a head against inflation by the oil prices surging ahead of the driving seasons and the expected shortage of the benzene after today's US inventories decreasing of the fuel and the current expectations of the demand rising. The last minutes in the markets were really severe volatile minutes and the gold could reach
940$.Yesterday, the release of the US housing starts of April could weighed on the equity market performance and the risk appetite of the investors as they slumped to 458k y/y and they were expected to be
520k from 530k in March. The building permits have shown stagnation below .500M at .494M m/m and the market was waiting for improving to . 530M from .510M came in March. These housing data have come after the release of May US NAHB new home which have increased to 16 from 14 in April showing an improving of the housing market in US which means that the recovery is still smooth and gradual and the consuming sentiment is still struggling but the stocks markets have been underpinned by the market believes in the banking sectors abilities to recover and to pay back the US governmental funds sooner than later pushing the banks stocks pushed higher and today the BofA has shown to the market its abilities to have new capitals for its issued stocks which reflect the current market confidence of passing the crisis.Best wishes
FX Consultant Walid Salah El Din E-Mail: snipped-for-privacy@fx-recommends.com