U.S. stock markets are
trading sharply higher at the mid-session, driven by reports that the
Greek sovereign debt problems will be resolved shortly. Stock investors
are driving up stocks across the board as confidence is being restored
to the markets. Bargain hunters have also stepping in to take advantage
of lower priced equities.
On Monday, the Dow closed under 10,000
for the first time since November 2009. Some read this as a bearish
sign while other saw this as a chance to gobble up cheap stock. For
days, the major indices had been trading as if waiting for a catalyst.
The developing story out of the Euro Region is the catalyst behind
today‚Äôs sharp rise.
Treasury futures are trading under pressure
today because of technical and fundamental reasons. Demand for higher
risk assets is leading to liquidation of safety plays put on by nervous
investors last week. Additional pressure is coming from the increase in
supply from the upcoming Treasury auction. One sign of impending
weakness is the penetration of a support level at 118‚Äô24.
Gold is trading higher, driven to the upside by the weaker Dollar and
demand for risky commodities. The recent break may have been overdone
to the downside which is helping to give longer-term investors a chance
to re-enter positions at cheaper prices.
Greater demand for
risky assets is also helping to give March Crude Oil a boost. Although
the supply and demand picture remains bleak, cheap prices following the
recent sell-off and the weaker Dollar are reasons enough to re-enter on
the long side. The first upside target is a retracement zone at 74.63
Appetite for risky assets is helping to drive down
the U.S. Dollar at the mid-session. Profit-taking and fresh selling is
apparent as investors adjust their portfolio positions in anticipation
of a resolution to the sovereign debt problems in Greece and the
neighboring Euro Region.
At this time, the resolution appears
to be specifically designed for Greece. Investors are still skeptical
as to whether similar problems in Portugal and Spain will get the same
treatment. These concerns could be helping to limit today‚Äôs gains.
March Euro is trading sharply higher at the mid-session on the
possibility that the Greek fiscal problems will be resolved in an
orderly fashion. Investors are covering short positions aggressively in
an effort to lock-up recent profits. In addition, new long positions
are being entered as bullish traders anticipate the possibility the
Euro will return to a more reasonable price level.
British Pound is mounting a strong recovery this afternoon after
trading lower for several days while breaking key support levels. The
gains in the Pound are most likely a relief rally, triggered by
short-covering. Investors are still skeptical about the U.K. economy as
well as sovereign debt issues of its own. U.K. traders are worried that
its oversized budget deficit will encourage debt rating services to
lower its credit quality.
Aggressive demand for higher yielding
assets is helping to push the March Japanese Yen lower. Traders have
been lightening up safe haven positions in the Japanese Yen. Volatility
is likely to be high once the announcement of the plan to shore up
Greece‚Äôs finances is finally released. Long positions in the Yen and
other Asian currencies have been building for several weeks because the
current fiscal problems, driving these markets seems to be isolated in
Today‚Äôs Euro rally is taking the pressure off the Swiss
National Bank to intervene on the Swiss Franc‚Äôs behalf. This is helping
to strengthen the March Swiss Franc. The SNB will do anything to defend
its currency against deflation and this includes applying intervention
when necessary. As long as the Euro appreciates versus the Swiss Franc,
the SNB will avoid using intervention as its main tool to maintain
stability and order to this currency relationship.
equities, gold and crude oil are helping to fuel demand for risky
assets. This action is leading investors to step up demand for the
Canadian Dollar while exerting pressure on the US Dollar. The charts
are indicating this currency is likely to return to the middle of its
‚Äúsuper range‚ÄĚ at about .9553.