FXS: The dollar fell against most of its major trading partners
Review U.S. stocks rose, sending the Standard & Poor’s 500 Index to a four-month high, after Lennar Corp. beat analysts’ earnings estimates and International Business Machines Corp. announced a $1.7 billion takeover. Lennar gained 8.4 percent after the third-largest U.S. homebuilder by revenue topped projections as margins widened. Apple Inc. climbed 2.9 percent after Kaufman Brothers LP raised its share-price esti-mate to $374. The S&P 500 advanced 1.5 percent to 1,136.50 at 4:30 p.m. in New York, the highest since May 13.
Strategy Looking ahead, we are expecting a continuation of yes-terday’s strong rally based on positive market sentiment. We think the U.S. macroeconomic pictures showed some improvement over the last couple of weeks and we saw a strong risk appetite coming into the market. Our view is bullish for Equities and we think to-day's FOMC meeting should be closely watched in order to better assess the current U.S. macroeconomic picture. We need positive economic data to see a continuation of the recent strong uptrend. Today’s Housing Starts and Building permits may both be interest-ing leading indicators, ahead of this week’s more significant New and Existing Home Sales.
Review The dollar fell against most of its major trading partners as stocks and commodities gained, boost-ing investor appetite for higher-yielding currencies. Demand for the euro was tempered by widening spreads between so-called peripheral nations’ bonds versus European benchmarks before debt auctions this week. The dollar depreciated 0.1 percent to $1.3066 per euro at 4:30 p.m. in New York, from $1.3050.
Strategy Looking ahead we are expecting a continuation of the recent uptrend mainly due to a weak dollar rather than a strong eu-ro. Today’s main focus is on the FOMC meeting that may provide interesting details about any further potential quantitative easing measures. We think Federal Reserve may buy additional treasury securities by the end of this year in order to help sustain growth and support a still weak U.S. demand. This may add some pressure to the dollar and provide some support for the euro in the short-term. We are looking at $1.3159 as a first target for today’s session.
Alternative Scenario Negative euro-zone fundamental news flow could lead to a break-out of yester-day’s low at 1.3029 opening the way for a more aggressive move to Wednesday’s low at 1.2955.
