By FX Empire.com
Better than expected earnings from European companies spurred demand for higher yielding assets on Tuesday ahead of a key vote on budget in Italy, which also holds the key to Berlusconi’s future as Italian Prime Minster, where concerns mounted that Italy could be the next victim of the European debt crisis.
Meanwhile, traders were also focused on Greece, as they are set to appoint a new Prime Minister after George Papandreou resigned as Prime Minister. Moreover, yields on Italian bonds rose to a record in the euro zone era, which signals mounting concerns among traders over the fiscal health of Italy and whether it can sustain its widening budget deficit.
Accordingly, traders targeted higher yielding assets, as rising equity markets overshadowed mounting concerns from the EU debt crisis, which put the U.S. dollar under pressure against major currencies.
The U.S. dollar fell against a basket of major currencies on Tuesday, where the U.S. dollar index was trading at 76.77, compared with the opening level at 77.05. The Euro gained against the Dollar, where the EUR/USD pair traded at $1.3819, compared with the opening level at $1.3759, the British Pound also gained against the Dollar, where the GBP/USD pair traded around $1.6091, compared with the opening level at $1.6063, and the U.S. dollar fell against the Japanese Yen, where the USD/JPY pair was trading around 77.72, compared with the opening level at 78.07.
Stocks in the United States gained by opening on Tuesday, as the Dow Jones Industrial Average was up by nearly 0.40% to trade around 12,115, while the S&P 500 index was higher by nearly 0.50% to trade around 1267. European stock indexes were also higher before closing on Tuesday, where FTSE 100 was up by nearly 1.50% to trade at 5595 and the DAX was down by nearly 2.20% to close around 6058.
Gold prices were little changed on Tuesday to trade now around $1794 an ounce and crude oil prices also gained to trade around $96 a barrel.
Originally posted here
