Markets regained some confidence today, after S&P and Moody’s rating agencies said they wont downgrade the US credit rating after the super-committee failed to reach an agreement on a $1.2 trillion deficit-cutting plan over the next since this will trigger automatic spending cuts due to begin in 2013.
In August S&P downgraded the long-term US Treasury securities for the first time in its history from AAA to AA+. Meanwhile Fitch said it might consider cut the outlook on its “triple-A” rating. More reassurance was given by President Barack Obama who said that the US is not facing an imminent threat of default.
Confidence was also sustained today by the World Bank statement which indicated that Asia can withstand the impact of the escalating European debt crisis since they have fiscal policies that will could boost consumer spending and compensate for the slump in demand for exports.
As sentiment improved today, demand for higher yielding assets increased, imposing downside pressures on the USD ahead of the GDP report due to be released later in the day from the US, expected to show that the economy grew by 2.5% in quarter three.
The greenback is trading as of this writing around the 78.19 level. Later today the US will also release the minutes of the last FOMC meeting which is expected to show if the FOMC members discussed the possibility of QE3, although for now it’s unlikely amid the recent improvement in overall economic conditions.
If the US will present strong growth numbers today this could boost optimism in markets and risk appetite could increase even more. Meanwhile Europe lack the fundamentals for today, while UK released a positive public finances and net borrowing numbers for Oct.
The euro is enjoying some bullish momentum today and as of this writing is trading around 1.3522 from the opening at 1.3489. Meanwhile the pound is almost unchanged trading around 1.5635. aversion pushed the yen lower today trading around 76.90. The AUD is trading around 0.9855.
The greenback’s losses today gave the opportunity for commodities to incline after a few days of losses, where oil rose above the $97.00 level trading as of this writing around $97.59 per barrel, while gold regained of the losses trading around $1690.25 from the opening at $1677.07 per ounce.
Originally posted here
