Trading Update - Dollar Strength Returns

With an hour to go before the US markets open, the dollar is back on top again.  The dollar index is back above 80.00 as it has risen over 0.5% on the day.  Falling on the greenback’s strength is the EURUSD which has lost over 100 pips from its highs to trade currently at 1.2950.  After slowly falling, selling in the pair intensified after it broke below its earlier morning low of 1.3015. Also lower is the GBPUSD which had traded as high as 1.5668 following better than expected UK Construction PMI figures earlier today.  He pair is currently below 1.5600 to 1.5585. Although riskier currencies are taking the biggest blow against the dollar today, the greenback is also showing gains against the Yen as the USDJPY is higher by 20 pips to 76.75. 

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The return to the dollar is also affecting equities and commodities as global stock indexes are all lower.  In Europe, the CAC 40 which has underperformed versus its peers yesterday, continues to show relative weakness and has fallen over 1.0% to 3212. Following Europe’s lead, US stock futures are indicating a lower opening for the Nasdaq and Dow Jones. Even the FTSE which had shown early gains following the positive Construction PMI figures has turned red and is currently trading 0.2% lower.

Elsewhere, prices of Gold have fallen $10 to trade below 1600 again, and hit a low of 1593.  Falling a similar amount is Crude Oil which is 0.8% lower to 102.20.

With little meaningful news hitting the market today, traders have cited anxiety towards Thursday and Friday’s US employment data plus continued worries towards the EU’s debt crisis and triggering the move back into the dollar.