Forex Connect: Higher Risk To Boost Equities, Pressure Bonds - Feb 8 10 9:04 EST
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Forex Connect:
Higher Risk To Boost Equities, Pressure Bonds
An easing of investor risk sentiment is helping to support equity price overnight, says Brewer Futures Group. Catch Brewer Futures, and TheLFB trade team on ForexTV Live.
Early in the trading session, stock markets followed through to the upside following Friday’s strong finish and talk of a possible resolution of the fiscal problems plaguing the Euro Region.
Appetite for risk was on the rise as the Dollar weakened and the Euro rose. Optimism that a viable solution could be reached to assure investors that Greece would adhere to its budget, helped drive investor confidence up. It looks as if today could start out choppy until investors decide whether to embrace risk or repel it.
March Treasury Bonds are trading lower. The overnight weakness is being triggered by a combination of falling demand for lower risk assets and the new supply of debt which is ready to come to the market courtesy of the U.S. Treasury. Overnight support is being established at a 50% level at 118’24. A failure to hold this level is likely to trigger an acceleration to the downside.
The weakening Dollar helped April Gold rally overnight. Traders also believe that the gold market overreacted to the downside last week. A combination of oversold conditions and a successful test of a retracement level at $1049.60 could help to give Gold a boost today. Furthermore, growing deficits in most major economies is renewing talk of a major inflationary situation. Some gold investors believe that central banks will be forced to print money to cover their deficits. This will weaken paper money, making hard assets more valuable.
The weaker Dollar and increased demand for higher risk is helping to drive up March Crude Oil overnight. The supply and demand situation remains bleak so this market will be more sensitive to currency movement. Look for a surge to the upside if the Dollar trades through last night’s low. Full Article...
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