U.S. equity futures are called higher this morning as Asian and European investors turned their attention toward risky assets after standing aside for the past three days. Investors are selling Dollars in anticipation of the Fed leaving interest rates unchanged until at least the end of the year. Traders are also expecting to hear good news regarding the global economic recovery from the G-20 meeting later this week. Basically, investors cannot find a reason to buy Dollars other than oversold conditions which were taken care of by the recent two day rally.
Treasury futures are expected to open lower this morning. Investors are selling T-bonds and T-notes in anticipation of the start of this week’s $112 billion auction. With equity markets offering a strong return, Treasuries may need to offer higher yields in order to attract strong demand.
The U.S. Dollar is trading weaker this morning following a two day short-covering rallying. The December Euro is trading at a new high for the year as traders increased demand for higher yielding assets. Higher crude oil and equity prices are helping to support the December Canadian Dollar. Traders have set aside their concerns about the U.K. economy and financial system and are buying the December British Pound after several days of extreme weakness. Investors have resumed their interest in the long side of the December Japanese Yen after a couple of days of profit-taking.
December Gold is rallying this morning because of the weaker Dollar. Selling pressure had broken gold under $1000 which made the metal more attractive. Traders seem reluctant to buy strength which means this market could be taking on the characteristics of the equity markets where traders prefer to buy the dips. Look for higher markets as long as the Dollar remains weak.
Traders are once again buying December Crude Oil as traders seek higher risk assets. The weaker Dollar is making dollar-price crude oil an attractive buy. The supply/demand picture has not changed but traders may be anticipating good news from the G-20 later this week which points toward greater demand because of a global economic recovery.
November Soybeans and December Corn seem to be building a support base after several days of weakness. The lower Dollar may lead to a pick-up in foreign demand while shorts remain skeptical about adding to their positions because of the threat of an early frost.
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