USD Rallies

[JHayzament]

The dollar surged against the majors in early Tuesday trading, rallying to 1.4789 against the euro and 1.6287 versus the British pound. The catalyst for the greenback’s advance was earlier weaker-than-expected US economic data, prompting heightened risk aversion and a shift from riskier assets. Spot gold and crude oil both traded lower, easing to $1,036 per ounce and dipping below the $80 per barrel level to $79. The major US equity bourses were largely flat on the session, with the Dow Jones hovering just above the 9,900-mark.

There were several key economic releases earlier in the session, including August Case-Shiller home prices, the October Conference Board’s consumer confidence survey and the October Richmond Fed manufacturing index. The Conference Board’s consumer confidence survey for October sharply missed consensus estimates for an improvement to 54.3, instead tumbling to 47.7 from 53.1 in September. The disappointing confidence indicator sent the dollar sharply higher as traders dumped riskier assets for the safe-haven play.

The calendar for Wednesday consists of September durable goods orders and new home sales.

[Pinalli]

In a light day of trading due to the Veteran’s Day holiday in America, investors took the opportunity to trade the USD up after early session losses failed to break through key levels.

The technical rally also came after Federal Reserve board members said that any recovery in the US economy will be erratic at best. The comments initially caused the downturn of the Dollar in the overnight session but when support levels were not broken, traders took advantage of the light volume to push the Dollar higher.

[jsraja]

USD and equity markets continue to trade higher as the inverse correlation for the USD and risk appetite breaks. Investors are liquidating short USD positions and unwinding USD carry trades before year-end. Optimism about the US recovery and speculation that the Fed will begin to withdraw stimulus sooner than expected supports the USD.