USD – Uncertain Global Economies

Wednesday proved that risk appetite clearly can be taken off the table quickly. The USD gained versus the EUR and GBP, as its stable performance the past couple of days grew into strong momentum. This took place as investors proved that they were shaken by the Fed’s FOMC Statement, and the combination of prior lackluster data, that seems to point to an American economy that at best will struggle to remain stable – and in a worst case scenario could wobble back into recession. Wall Street suffered steep declines across the major indexes and its effect on traders was rapid worldwide. Today weekly Unemployment Claims will be released and the anticipated outcome is 465k, which would be an improvement over the previous week, but nonetheless nothing to start festivities with. Tomorrow the Retail Sales figures and the Prelim University of Michigan Consumer Sentiment readings are on the calendar.

Essentially what happened yesterday was a reaction to the FOMC Statement from Tuesday in which its rhetoric seems to have shifted to a more downbeat mood. This propelled investors who have expressed negative sentiment to climb down from the fences and take defensive positions, which means in essence that the USD became a safe haven force. With today’s unemployment numbers and tomorrow’s Retail figures on the schedule sentiment will get two more important doses to build on. Wall Street has returned to a negative net result for the year and what may worry investors is that recent outlooks coming from the corporate front appear to be cautious. As tiring as the same song may get, traders must monitor the jobless and consumer sectors. These next two days of trading will provide impetus and if negative winds get strong, the USD could find renewed backing.

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