The USD remains strong, adding some pressure to equity and commodity markets

Wednesday, July 23, 2014

European equity markets edged slightly higher in today’s trading session, while investors remained cautious after the strong rebound across equities and commodities yesterday. The CAC, DAX, IBEX and the London equities market managed to end in positive territory, while trading conditions were fairly thin due to the absence of major macroeconomic indicators.

The USD index held strongly above 80.8 as the US dollar continued its strong rally against the euro and sterling. On the macroeconomic front, the Eurozone’s consumer confidence indicator fell to -8.4 in July compared to -7.46 in June, missing analysts’ expectations of -7.5. The euro remained under pressure, trading around 1.345 against the dollar following the release.

USD Index Spot

DXY Curncy (DOLLAR INDEX SPOT)   2014-07-23 17-19-11

In London, banks and mining stocks continued to provide further support to the market, offsetting losses in utility and healthcare stocks. 

Rio Tinto, Glencore and BHP Billiton extended gains by adding between 0.6% and 1.6% in today’s session, despite mixed base metals prices. Copper edged higher to retest $7,050, while lead, nickel and zinc gave back yesterday’s gains. Aluminium’s rally has been halted today as the metal slid lower towards $2,015 due to some profit taking after hitting a day’s high at $2,047.

LME Aluminium 3M

LMAHDS03 Comdty (LME ALUMINUM  3 2014-07-23 17-18-35

 

Tomorrow, investors will be keeping an eye on Japan’s imports and exports as well as Chinese HSBC manufacturing PMI Flash data for July. Market participants will be watching for the Markit manufacturing and services flash PMI data from the Eurozone and Germany specifically, as well as UK retail sales and US weekly jobless claims.  

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