Stock index futures closed higher but weakened late in the session after soaring in the morning. Yesterday’s quick surge early in the trading session put them into overbought territory, giving investors an excuse to take profits. Throughout this entire rally since March, traders have not been too fond of chasing markets higher, so a correction from current levels will not be unusual. Short-term, this market should continue to move higher as long as the Fed keeps interest rates low and the world continues to use the Dollar as a carry currency.
Treasury futures finished higher. Cash markets were closed because of the Veteran’s Day holiday. This helped give speculators a free look at the upside before hedging pressure returns Thursday. The weakening equity markets also helped contribute to the strength. A rise in equity prices today could force the Treasury Bonds and Notes to retreat.
The Dollar mounted a comeback after hitting a 15-month low against a trade-weighted basket of currencies early Wednesday. The December Euro once again failed in its attempt to break out over the recent top at 1.5062. The December British Pound was under pressure because of comments from the Bank of England. In a report, the BoE hinted that a recovery may be starting but it may take a lower currency and more quantitative easing to revive the economy. Falling equity markets and a flat crude oil trade helped to weaken the December Canadian Dollar at the mid-session, but the market was able to right itself into the close.
December Gold surged to a new all-time high on the Dollar’s early session weakness. Gold weakened somewhat into the mid-session but remained in an uptrend despite the short-covering rally in the U.S. Dollar. Overnight, gold reached another new all-time high.
December Crude Oil traded flat to better most of the day. Speculators appeared to be holding up this market throughout the day. The strengthening Dollar and weakening stock market put some downside pressure on oil. An industry report showed that inventories were higher than expected but speculators for the most part ignored this report.
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