 The day’s big event was the release of Euro-zone bank stress tests, which were set out to gauge whether Europe’s banking sector has sufficient capital, if the economy suffered another more severe shocks than the financial crisis. The results showed 7 banks needed more capital, but questions remain about if the criteria used was too lenient. |
 Fed chairman in testimony before Congress said the economic outlook was “unusually uncertain” and that the Fed was prepared to take additional action if needed. But Bernanke did seem concerned about draining liquidity as opposed to providing further stimulus, which gave his speech while dovish on the economy a hawkish feel in terms of monetary policy. Risk aversion jumped as US stocks fell, helping to boost the Dollar against higher-yielders like the Canadian and Australian Dollars. |
 Fed policy makers confirmed what the data the last month and a half has been showing – that the US economy faces a relatively modest worsening. Weaker than expected retail sales data only brought home the point in earlier NY trading. The greenback was weaker with the Euro and Pound rising, while the Yen benefited from traders taking some risk off the table. |
 Global equities rallied as early 2nd quarter earnings were better-than-expected and Greece held a well received debt auction. That boosted risk appetite and helped “risk-on” trades as the Euro, Pound, and commodity currencies rallied against the greenback. We also take a look at UK releases and US and Canadian trade data. |
 The Dollar strengthened versus its main rivals as investors positioned themselves ahead of US earnings and a Greek bond auction. While the Yen recovered its losses following its Sunday election, the Pound faltered in its attempt to regain its overnight losses as S&P reiterated its negative outlook of the country’s credit rating. The Euro and Canadian Dollar were weaker against the greenback even at the mid-point of NY trading. |
 The Pound slid in late NY morning trading as Standard & Poor’s affirmed its AAA rating for the UK, but gave the country a negative outlook. |
 The Dollar gained against its main rivals overnight – the Euro, Pound and Yen – but gave up its gains against the latter two. The move in favor of the greenback may be traders positioning ahead of the start of the second quarter earnings season, while the weakness in the Euro comes ahead of several debt auctions from troubled nations later this week – Greece, Spain and Portugal. |
 The Euro was higher on developments in its financial sector. The strength in Europe helped boost the Pound as well. Overnight the Aussie was sold as there was further evidence that China’s economy was cooling, perhaps even faster than expected. In the US weak jobs data hurt the USD/JPY pair, continuing the trend of the Yen gaining as US Treasury yields decline. . |
 The Euro managed to rally against its rivals as a three-month tender by the ECB showed less than expected demand for loans from the bank. The Pound lost ground on end of the month flows while commodity currencies were weaker as a result of concerns about global growth and a weak US ADP employment report. |
Daily Video Recap: Upbeat Euro-Zone, UK Data Countered By Weak US Reports
Fundamental Updates \ Nick Nasad \ 1:04 PM EDT \ July 27th, 2010A strong UK sales release and upbeat results about Euro-zone lending and money supply led a move in higher yielders and boosted “risk-on” trades. But, a weak US consumer confidence report took some of the momentum out of risk seeking behavior and caused the greenback to recoup some of its earlier losses.