Forex News – Strong U.S. Housing Data and Earnings Boost Confidence in Markets,... |
Optimism spread through financial markets in Europe and the United States after strong earnings from U.S. companies and better than expected U.S. housing data, which boosted confidence among investors, as they targeted higher yielding assets against lower yielding ones, which pushed the U.S. dollar to drop against majors.
Several U.S. banks and companies reported their earnings for the second quarter of 2011, where IBM, Coca-Cola Co, Wells Fargo, Johnson & Johnson, Bank of New York Mellon, and Bank of America posted results that topped estimates, which provided stock indexes with strong momentum to rise, although Goldman Sachs, the giant U.S. bank reported disappointing results, however, traders were still focused on the bigger picture, since most U.S. firms reported strong earnings so far.
Meanwhile, U.S. housing starts and building permits rose in June above expectations, which boosted confidence among investors, and increased demand for higher yielding assets, where housing starts rose by 14.6% to reach 629,000, well above expectations of 575,000, and building permits increased 2.5% to reach 624,000, also above expectations of 595,000.
Moreover, the Bank of Canada announced on Tuesday that it left the benchmark interest rates unchanged ta 1.00% in line with median estimates, where the BOC signaled in a statement that weak economic conditions in the United States, in addition to the European debt crisis had forced the BOC to take a cautious approach regarding monetary policy.
Stocks in the United States rose by opening on Tuesday, where the Dow Jones Industrial Average was up by nearly 1.10% to trade around 12,520, while the S&P 500 index was up by nearly 1.10% to trade around 1320. European stock indexes were also higher before closing on Tuesday, where FTSE 100 was up by nearly 0.73% to trade at 5795 and the DAX was higher by nearly 1.30% to trade around 7200.
The U.S. dollar declined against a basket of major currencies on Tuesday, where the U.S. dollar index was trading at 75.03, compared with the opening level at 75.32. The Euro rose against the Dollar, where the EUR/USD pair traded at $1.4199, compared with the opening level at $1.4125, and the British Pound also rose against the Dollar, where the GBP/USD pair traded at $1.6146, up from the opening level at $1.6068.
Gold prices retreated on Tuesday from a new record high at $1609.92 an ounce, where gold was trading around $1601 an ounce, but crude oil prices rose amid rising optimism in markets to trade around $98 a barrel.
Originally posted here.
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