Expectations of Further Monetary Policy Easing Boost Confidence Despite Weak Housing Data

By FXEmpire.com

Traders continue to speculate that the Federal Reserve Bank’s Chairman will announce later this week new monetary easing measures to help aid the economic recovery amid recent signs of slowing economic activities in the United States, and accordingly, confidence remained high among investors, as they continued to target higher yielding and more risky assets on Tuesday.

Meanwhile, data from the U.S. housing market confirmed the ongoing deterioration in housing activities, where the new home sales index fell in July to 298,000 units, compared with median estimates of 310,000 units, nonetheless, investors were still focused on speculations of a third round of quantitative easing.

Stocks in the United States rose by opening on Tuesday, where the Dow Jones Industrial Average was up by nearly 1.20% to trade around 10,985, while the S&P 500 index was up by nearly 1.30% to trade around 1138. European stock indexes were mixed before closing on Tuesday, where FTSE 100 was nearly unchanged to trade at 5095 and the DAX was up by nearly 0.30% to trade around 5490.

The U.S. dollar fell against a basket of major currencies on Tuesday, where the U.S. dollar index was trading at 73.92, compared with the opening level at 74.06. The Euro rose against the Dollar, where the EUR/USD pair gained to trade at $1.4410, compared with the opening level at $1.4357, and the British Pound rose against the Dollar, where the GBP/USD pair traded around $1.6527, compared with the opening level at $1.6457.

Gold prices fell on Tuesday from a record high above $1900 an ounce to trade around $1877 an ounce, and crude oil prices were little changed to trade around $84 a barrel.