We saw the S&P 500 hit 11½ year lows as continued concerns about the US economy surfaced. US data yesterday showed jobless claims came in at 542k vs 505 expected and the Philidelphia Fed (a survey conducted by the Philadelphia Fed questioning manufacturers in the Third Federal Reserve District on general business conditions) came in at -39.3 vs. -35 expected.
Higher Philadelphia Fed Survey figures indicate a positive outlook from manufacturers, suggesting increased production. Higher production contributes to economic growth, which is generally bullish for the dollar. Adding to the USD strength was the large slump in Oil below the critical $50 a barrel support.
A reasonably quiet day on the Euro/dollar market saw a low of 1.2475 and a high of 1.2810, but the bulk of trading mainly took place between 1.25 and 1.27 with 1.2500 a key level that the Euro has gravitated around. Large falls in oil and stocks finally forced the pair lower into the US close.
Currency trading sentiment has recently shown the Euro being bought against the US Dollar, and market analysts believe that a sudden shift in sentiment may bring Euro weakness against its US counterpart. The ratio of long to short positions in the EUR/USD stands near parity as approximately 51% of traders are short.
The pound saw extended losses below 1.50 as oil dropped below $50 a barrel. The market is still extremely bearish on the UK economy which combined with fresh stock weakness undermined the already fragile support. October Retail Sales beat expectations at -0.1% vs. -0.9% forecast. Overall the GDP/USD traded with a low of 1.4716 and a high of 1.4993 with the bulk of trading conducted between 1.4750 and 1.4850.
Australian dollar came under severe pressure against the US dollar after the Key level that was twice supported by the Reserve Bank of Australia at .6350 broke. The pair quickly fell to lows of 0.6200 and as commodities slid, the AUD continued to slide. This resulted in fair gains for Sterling against the Aussie and saw it break up to 2.4250 in afternoon New York trading.