By FX Empire.com
Pessimism dominated global financial markets on Wednesday, where weak economic data from major economies around the globe weighed down on confidence. Moreover, woes from the European debt crisis continued to dominate financial markets, which encouraged investors to target lower yielding assets and shun risky assets, sending the U.S. dollar to the highest level in seven weeks against major currencies.
China’s PMI contracted in November, posting the weakest performance in 32 months, while PMI manufacturing in Germany and the Euro Zone contracted worse than estimates. Also industrial orders in the Euro Zone contracted in September.
Data from the United States showed more weakness as well, where the income report signaled that personal spending remained weak in October, while the University of Michigan reported lower than expected confidence in the final estimate for November. Moreover, jobless claims rose last week above estimates, and the only good news from the United States was the better than expected durable goods orders in October.
Meanwhile, fears from the European debt crisis continued to weigh on confidence, especially after Germany suffered one of its worst Bund auctions since the inception of the Euro, which send yields on Italian and Spanish bonds soaring just below 7%, intensifying concerns over the outlook of the euro zone debt crisis and its possible impact on economic growth.
The U.S. dollar rallied to the highest level in seven weeks against a basket of major currencies on Wednesday, where the U.S. dollar index was trading at 79.02, compared with the opening level at 78.48. The Euro fell sharply against the Dollar, where the EUR/USD pair traded at $1.3332, compared with the opening level at $1.3518, the British Pound also dropped sharply against the Dollar, where the GBP/USD pair traded around $1.5507 compared with the opening level at $1.5644, and the U.S. dollar extended its gains against the Japanese Yen for a third day, where the USD/JPY pair was trading around 77.56, compared with the opening level at 76.98.
Stocks in the United States extended the losses by opening on Wednesday, as the Dow Jones Industrial Average was down by nearly 1.40% to trade around 11,331, while the S&P 500 index was down by nearly 1.60% to trade around 1169. European stock indexes were also lower before closing on Wednesday, where FTSE 100 was down by nearly 1% to trade at 5156 and the DAX was down by nearly 0.50% to close around 5511.
Gold prices dropped amid the dollar’s strength on Wednesday to trade now around $1678 an ounce and crude oil prices dropped as well to trade around $95 a barrel.
Originally posted here
