Pessimism dominated markets ahead of the EU summit on Friday, where the U.S. dollar strengthened despite the ECB’s announcement of more monetary easing, as the European Central Bank cut the benchmark interest rates by 25 basis points to 1.00% in line with forecasts and announced more nonstandard measures to ease tensions surrounding the European debt crisis. Nonetheless, the ECB stopped short from signaling quantitative easing, which weighed down on confidence ahead of the EU summit on Friday.
Also, the Bank of England decided to keep its monetary policy unchanged on Thursday, where the BOE left the benchmark interest rates at 0.50%, while also keeping the Asset Purchase Program unchanged at 275 billion pounds, which was in line with median estimates.
Moreover, Canada released the housing starts for November, where housing starts fell to 181.1 thousand, worse than median estimates of 200.0 thousand.
Meanwhile, U.S. jobless claims failed to restore confidence despite falling to the lowest level in 9 months, where jobless claims fell to 381 thousand last week, well below median estimates of 395 thousand and the prior revised estimate of 404 thousand.
Pessimism started to spread through markets ahead of the EU summit, where investors are starting to doubt the ability of EU leaders to come up with a resolution to the debt crisis. Accordingly, investors targeted lower yielding assets including the U.S. dollar, which put higher yielding assets under pressure.
The U.S. dollar gained sharply against a basket of major currencies on Thursday, where the U.S. dollar index was trading at 78.82, compared with the opening level at 78.43. The Euro fell against the Dollar, where the EUR/USD pair traded at $1.3307, compared with the opening level at $1.3399, the British Pound also fell against the Dollar, where the GBP/USD pair traded around $1.5620, compared with the opening level at $1.5699, and the U.S. dollar fell against the Japanese Yen, where the USD/JPY pair was trading around 77.54, compared with the opening level at 77.68.
Stocks in the United States were lower by opening on Thursday, as the Dow Jones Industrial Average was down by nearly 0.45% to trade around 12,140, while the S&P 500 index was down by nearly 0.75% to trade around 1251. European stock indexes were also lower before closing on Thursday, where FTSE 100 was down by nearly 0.60% to trade at 5512 and the DAX was down by nearly 1.80% to close around 5886.
Gold prices fell to trade now around $1715 an ounce and crude oil prices fell as well to trade around $98 a barrel.
Originally posted here
