A sharp break in the equity futures markets is helping to drive up the U.S. Dollar at the mid-session.
A sharp break in the equity futures markets is helping to drive up the U.S. Dollar at the mid-session. Equity markets stopped going up after an early attempt by traders to take out last week’s highs fizzled. Money leaving the stock market went into the Dollar as traders sold currencies to pay back loans used to buy equities.
The EUR USD popped to the upside overnight as a story out of China hinted that the Chinese should consider dumping Dollars for the Euro and Japanese Yen. The inability to attract fresh buying as the market nosed through last week’s 14-month high encouraged selling pressure. This currency pair accelerated to the downside once traders were certain the psychological support at $1.5000 was not going to hold.
This morning, short-covering and position evening helped support a small gain in the GBP USD. Once the equity markets began to break and the Dollar rally, traders realized that long the British Pound was not the position to be in. At the mid-session, the British Pound is giving back the earlier gains and is now trading lower. Traders are bearish the British Pound on speculation the Bank of England will increase its quantitative easing program.
Early this morning the Japanese Yen received a boost from a story out of China calling for the government to buy Euros and Yen while dumping Dollars.