The appointment of Tim Geithner as head of treasury and speculation that a new stimulus plan would be in place by the time Obama takes presidency helped sentiment considerably. Looking ahead, National Activity Index is out later, Home Sales are expected at 5.05 million compared to 5.18 million previously. President-Elect Obama will be speaking later on today.
Euro finished stronger after a wild ride due to US stocks experiencing a rollercoaster session to finish higher. Data continued on a downward trend with Manufacturing PMI falling to 36.2 from 40.5 and Services PMI fell to 43.3 from 45.0 which indicated a sharp slowdown in economic activity. EUR/USD closed at 1.25 after trading at a high of 1.2625 and low of 1.2423. In Germany, IFO Business Climate has dropped to 85.8 from 90.2 and IFO Expectations have also dropped from 81.4 to 77.6. Looking ahead, Industrial Orders are forecast down to -3% from -1.2%.
GBP weakened as markets sold the pound as US stocks initially weakened, but then recovered as US stocks rallied into the close. GBP/USD closed at 1.4869 after trading at a high of 1.5060 and low of 1.4714. Any rallies that GBP sees at the moment are proving short lived as Sterling is still considered very weak going forward. The Government is under pressure to provide an economic stimulus plan to help stabilise the economy. Looking ahead, there is a mini-budget today at 15:30.
Gold rallied over 5% as investors sought to get their hands on the precious metal that is still seen as a safe commodity, closing at $800 an ounce after a high of $802 and low of $743.74. Oil closed up $0.51 ending at $49.93 a barrel.