Treasury futures are
trading lower at the mid-session following comments from Fed Chairman
Bernanke hinting at an interest rate hike. Although Bernanke did not
pinpoint when interest rates would rise, he did propose the Fedâ€™s
strategy on ending stimulus and hiking interest rates. Additional
pressure is coming from the increased T-Bond and T-Note supply which
will hit the market after the Treasury auction. Finally, if the
European Union announces its plan to help out Greece, Treasuries are
likely to feel more pressure because safe haven investors will begin
exiting their positions.
Stock Indices are trading better at
the mid-session following a choppy morning. The market seems to be
taking its direction from Fed Chairman Bernankeâ€™s comments. This
morning, Bernanke proposed strategies for ending stimulus and hiking
interest rates. His testimony hinted at an improving economy which is
helping to give equity markets a boost.
Look for increased
appetite for risky assets to send equity markets soaring once the EU
makes its announcement regarding its loan guarantees to Greece.
Gold is under pressure at the mid-session. The stronger Dollar is
triggering a profit-taking break because of the lack of follow-through
to the upside following yesterdayâ€™s bullish move. If a favorable
announcement regarding Greece is reached made today, then look for the
Dollar to break and gold to rally.
March Crude Oil is bucking the
trend in commodities and trading slightly better. Oversold conditions
and speculation that a solution to Greeceâ€™s debt woes will be reached
today are helping to give crude oil a boost. Stronger stock prices are
also helping. The rising Dollar should help to limit gains and may help
to turn this market lower by the end of the day.
Dollar remained under pressure at the mid-session as the lack of
concrete news regarding the European Unionâ€™s plan to guarantee Greeceâ€™s
debt caused investors to remain nervous. The Dollar received an
additional boost when Fed Chairman Bernanke hinted that the Fedâ€™s exit
strategy included raising interest rates. Since the EU has failed to
announce that an agreement has been reached with Greece, traders have
been focusing on the testimony of Fed Chairman Bernanke for direction.
major currencies are down versus the U.S. Dollar at the mid-session
after the European Union failed to deliver a resolution to the Greece
sovereign debt problem. On Tuesday, currencies led by a rally in the
Euro, pressured the Dollar on hopes that the EU and Greece would reach
an agreement regarding loan guarantees to ensure Greece would not
default on its sovereign debt.
Early trading conditions suggest
that traders are growing impatient with the EU foot-dragging, but the
markets could turn quickly at even a hint of a resolution. Traders
should expect unusual volatility and sudden changes in direction as
traders jockey for position ahead of this monumental pact.
viable agreement is reached today, then look for the start of a
short-covering rally. This will trigger a massive rise in the Euro. On
the other hand, a failure to announce a pact today will most likely
weaken the Euro as bullish traders will remain nervous holding on to
long positions. Any hesitation may also encourage hedge funds and
bearish traders to add to their massive short-positions.
European Union decides to guarantee Greeceâ€™s debt then look for trader
appetite for risk to skyrocket. This should trigger strong rallies in
equities and commodities. The Australian, New Zealand and Canadian
Dollars are likely to benefit the most over the short-run.
March Swiss Franc is down at the mid-session. The weaker Euro is
helping to contribute to this weakness. A move by the EU to shore up
Greeceâ€™s debt will take the pressure off the Swiss National Bank to
defend its currency against rapid appreciation and deflation.
debt concerns regarding Greece are helping to keep the pressure on the
March British Pound. If a resolution is announced today then, look for
the British Pound to rally. Gains could be limited as traders will
refocus on the U.K. economy. In addition, some traders are still
concerned that the U.K. budget deficit could trigger similar problems
the Greece deficit is causing.
The March Japanese Yen is the best
indicator as to how investors feel about risk and should be watched
closely. The Dollar has been slowly rising versus the Yen the past
three days, but not enough to assure traders to take on risk again. The
recent action resembles cautious optimism. The Dollar is stronger
versus the Japanese Yen today because of comments from Fed Chairman Ben
Bernanke calling for higher interest rates.