 A 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. |
 A better than expected new home sales release helped to spur gains in US equities which pushed up higher yielders at the expense of the greenback. The EUR/USD tested its one-week high at the 1.30 level. |
 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. |
 The euro and others gained sharply against the dollar Thursday after better-than-expected euro-zone and U.S. economic data boosted investor sentiment toward riskier assets. US equities were higher as US companies releases some strong earnings, which only further propelled currencies like the Aussie and Loonie. |
 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. |
 The Euro slid overnight after failing to move above the 1.30 level as traders digested reports that German lender Hypo Real Estate would need 2 billion euros in case of adverse circumstances. The BOC meanwhile, lifted rates to 0.75% but did so while painting a gloomier outlook for Canadian growth. US housing starts data came in weaker than expected. |
 The market brushed off a downgrade of Ireland by Moody’s as traders and investors look ahead to the release of Euro-zone bank stress tests. The 1.30 level held as resistance for the EUR/USD pair. The Bank of Canada meanwhile gets ready to raise rates by another quarter point tomorrow. |
 The dollar sank to its lowest level since December against the yen as UMich consumer sentiment plummeted in July adding to other economic data which has caused investors to question the pace of the U.S. recovery. US stocks were down sharply. That helped both the greenback and yen gain against growth sensitive currencies like the Australian and Canadian Dollars. |
 The US Dollar continues to suffer against the other major rivals – the Euro, Pound and Yen – as its data continued to support the view that the US recovery is slowing and the Fed will have to push back interest rate hikes to next year. Currencies tied to global growth such as the Australian and Canadian Dollars traded sideways on concerns about the global economy. |
Daily Video Recap: US GDP and a Preview of Next Week’s US Releases
Fundamental Updates \ Nick Nasad \ 4:34 PM EDT \ July 30th, 2010In today’s video we dissect the 2nd quarter GDP results and what it means for the US recovery. The economy grew a smaller than expected 2.4% annualized rate. We also cover the important releases to look out for next week.