The Euro Soars While the U.S. Dollar Gets Hammered
Jul 2nd 2010 8:00AM
Just a week or so ago, traders and analysts were looking for the euro to trade at parity with the U.S. dollar. Now it seems that the markets got turned upside down.
The euro has powered higher for the last several days and is now trading above $1.25 The reason given was traders were worried that banks would have to borrow heavily from the European Central Bank (ECB) to meet their financing needs. However, they borrowed less than anticipated. Then there was the fear that Spain would not be successful in issuing 3.5 billion euros of five-year bonds. That also did not happen.
Suddenly, the market took off like a rocket. The shorts panicked and covered. Technicians said that resistance had been broken, thus freeing the market to trade higher.
In the U.S., the numbers on the economy have been dismal. New housing sales are down. Car sales are flat. Unemployment is not improving. Numbers like GDP have been revised downward. This took a horrific toll on the U.S. dollar. The dollar has been selling down for several days and Thursday the September futures traded at 84.984, down 1.277.
Whether or not this is just a short covering rally remains to be seen. In any case, if you like volatility, the currencies are the place to be.
Jul 2nd 2010 8:00AM
Just a week or so ago, traders and analysts were looking for the euro to trade at parity with the U.S. dollar. Now it seems that the markets got turned upside down.
The euro has powered higher for the last several days and is now trading above $1.25 The reason given was traders were worried that banks would have to borrow heavily from the European Central Bank (ECB) to meet their financing needs. However, they borrowed less than anticipated. Then there was the fear that Spain would not be successful in issuing 3.5 billion euros of five-year bonds. That also did not happen.
Suddenly, the market took off like a rocket. The shorts panicked and covered. Technicians said that resistance had been broken, thus freeing the market to trade higher.
In the U.S., the numbers on the economy have been dismal. New housing sales are down. Car sales are flat. Unemployment is not improving. Numbers like GDP have been revised downward. This took a horrific toll on the U.S. dollar. The dollar has been selling down for several days and Thursday the September futures traded at 84.984, down 1.277.
Whether or not this is just a short covering rally remains to be seen. In any case, if you like volatility, the currencies are the place to be.