By FX Empire.com
Although currency markets are moving in tight ranges as investors continue to be cautious, commodity and equity markets rallied today on hopes European leaders are closer to contain the debt crisis. Stock markets also jumped on positive data from Japan and China.
European leaders ruled out yesterday tapping the ECB’s balance sheet and presented plans to aid banks and help Greece avoid a default. They are to meet on Wednesday in another summit to agree on concrete solutions that would prevent contagion.
After reports showed that Japanese exports increased in Sep. more than expected and China’s flash PMI manufacturing rose in October for the first time in four months, Asian stocks and European stocks rallied today, where the FTSE 100 rose as of this writing by 0.33%, DAX rose 0.62% and CAC 40 gained 0.15%.
Some positive third quarter earnings reports fromU.S.companies on Friday managed to support confidence boosting demand for higher yielding assets. The MSCI Asia Pacific Index rose today by 2.7% at 15:02 inTokyo, setting the biggest increase in two weeks.
But as investors continue to follow the developments from Europe, where the level of expectations is high, caution is persisting in the currency market, especially after some disappoint data fromEurope, where the dollar index is almost unchanged at 76.40 as of this writing.
The euro lost the gains seen this morning after contraction was seen in the manufacturing and services sector during Oct. in Europe. Yet the industrial new orders improved in August. Now the single currency is trading around today’s opening at 1.3850.
The pound is almost unchanged too trading as of this writing at 1.5935 while U.K. lack the fundamentals for today. The yen was stronger following today’s data, yet as of this writing is trading around today’s opening at 76.17. the AUD gained today after a report indicated inflation was lower in Q3 trading around 1.0390.
Volatility may persist in the following days, as the European leaders will meet to decide on the proper solution that would save the region from the debt crisis, while the US will release later this week its GDP for Q3 expected to show that the economy grew by 2.5% annual from 1.3% previous.
Oil and gold were higher today led by the gains seen in the stock markets, where crude is trading around the $88.00 per barrel level, while gold is trading around $1652.95 per ounce level.
Read more Daily Forex Fundamental Analysis here.
