Financials Lead Risk Appetite Higher High Yielders Benefit

Daily Forex Fundamentals | Written by AC-Markets | Apr 14 09 02:38 GMT |

Market Brief The dollar was slammed versus most of the majors based on increased demand for higher yielding assets. The EurUsd rallied strong rising 175pips to the higher range of 1.33, while the UsdJpy slid 16pips settling near 100. The GbpUsd surged 170pips to the mid range of 1.48, based on the general trend of weakness in the dollar. Equity markets closed negative in the US, but ended positive in Europe. The Dow was nearly unchanged on a percentage basis off a mere .32%, but we may be poised for a strong open tomorrow based on strong corporate earnings announced after hours. Bond yields remain constricted with the shorter maturity paper at historically low levels with the 2yr UST at 0.867% and the 10yr at 2.858%. Commodities were mixed with the energy sector seeing a slight pullback, and the precious metals sector gaining strength. Crude oil is trading around $50bbl, which is 4% lower than its previous close. Gold added 1.34% bringing the price to $893oz and silver gained 2.94% to 12.75oz. The trend of rising appetite persists with a shockingly strong earnings announcement from Goldman Sachs. The firm reported a 9.4Bln profit, surpassing estimates of $1.64 at $3.39 EPS (Earnings Per Share). This is a critical piece of information for Traders looking to effectively manage fluctuations in risk appetite. Earnings season will be a strong factor in driving financial markets, as a central concern for investors has been the viability of banks. We see strong signs that the Aussie and Kiwi should benefit from the return back to higher yielding assets, and possibly a re-emergence in the carry trade. The carry trade may be well ahead of us, but the clear interest rate differential between currencies like the AudJpy and NzdJpy. The Euro and Sterling benefited from the shift in risk sentiment, but the near-term economic outlook for these regions are unclear making them less attractive. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.