Euro/USD jumped to its highest level since September 17th trading at 1.3092 in Asia this morning. The Euro has increased more than 100 basis points over the last 24 hours after the rating agency Moody’s affirmed its investment grade sovereign rating of Baa3 on Spain, giving investors hope that Madrid shall be able to handle its huge public debt. Moody’s stressed the European Central Bank’s (ECB) willingness to purchase Spanish government bonds and Spain’s willingness to undertake austerity measures.
Some analysts saw, however, the strong increase of the Euro over the last couple of days as merely short covering. Many market players remain cautious of unwinding their bearish stand on the single currency, given the uncertain prospects of how to resolve the euro zone debt crisis anytime soon. A test on how high Euro/USD shall reach in the short term perspective is whether the Euro will push through the strong technical resistance level on 1.3170 which it reached in September.
Stock markets in USA, Europe and Asia had their best days in months helped by stronger than expected quarterly results from major US-companies. Dow Jones added 0,95 % while the technology index, Nasdaq, jumped 1,21 percent. Intel, Caterpillar, United Technology, American express and Boeing all added close to 2 percent and more. Growing risk appetite among investors weighed in on dollar index, measured against a basket of six key currencies, which fell to 10 days low boosting dollar based commodities and commodity linked currencies as the Australian and Canadian dollar and the Norwegian krones (NOK).
Japanese stocks continued to gain after last week’s sell out which took Nikkei to a two and half month low. Investors seem to realize that the stocks have fallen, too, fast and see present prices as a buying opportunity. Precious metals as gold and silver have rebounded from early week’s losses. Gold is at 1753 and silver 33.10. NYMEX, New York crude, continues up and reached above USD 92a barrel. Brent crude is losing momentum from its high yesterday and trades at 114.
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