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The Canadian dollar surged above US$1.05 Wednesday for the first time since November 2007, as strong inflation, higher commodity prices and a renewed slump in the greenback amid worries over the U.S. fiscal outlook.
Wednesday’s climb was a continuation of the previous day’s gains for the Canadian dollar, which climbed on news the annual inflation rate jumped to 3.3% in March. By 8 a.m. the loonie was trading at US$1.0501 against the U.S. greenback, the highest level since mid-November 2007.
“The USD should weaken further as the combination of U.S. monetary and fiscal policy weighs heavily on the outlook,” Camilla Sutton, chief currency strategist at Scotia Capital said in a note.
She noted that loose U.S. monetary policy was driving investors to commodities like oil in a search for better yields.
“With rising oil prices dampening the economic outlook, the Fed’s dual mandate will be increasingly difficult to fulfill and rates are likely to stay on hold for longer than the market is currently pricing in; in turn pushing oil (and commodities) higher and most important to FX traders, pushing the USD to new lows,” she added.
The U.S. dollar index which tracks the greenback against a basket of major currencies tumbled as low as 74.30 on Wednesday, not far from the recent cyclical low of 74.17 reached on Nov. 26, 2009.
Article provided via the Financial Post
http://www.financialpost.com/news/Loonie+soars+highest+since+2007/4645926/story.html
" Global markets rally on upbeat tech "..
" The economic and corporate message is good. There is nothing to fear but fear itself " ...
Upbeat earnings from companies including chip maker Intel lifted stocks and boosted appetite for riskier assets on Wednesday, driving commodities higher and the Australian dollar to a 29-year high versus the dollar.
The positive showing so far in the quarterly earnings season has helped offset concerns of government debt problems on both sides of the Atlantic after Standard & Poor’s on Monday cut the outlook on the United States to negative.
However, some investors remain wary of government debt problems, inflation and turmoil in the Middle East, and sent gold to an all-time high above $1,500. “While S&P grabbed some headlines earlier in the week, on a future event that may or may not happen, it seems things on the ground are coming up pretty good,” said Philip Isherwood, European equities strategist at Evolution Securities.
“The economic and corporate message is good. There is nothing to fear but fear itself.”
Intel posted higher than expected sales and forecast quarterly revenues well above Wall Street’s estimates, while the world’s biggest cosmetics group, L’Oreal, and carmaker PSA Peugeot Citroen also came in with robust figures.
Of the 45 S&P 500 companies that have reported first-quarter earnings so far, 79% have either beaten or met market expectations while the remainder came in below forecasts, data from Thomson Reuters StarMine showed.
U.S. stock index futures rose 0.9 to 1.2%, indicating a firm start on Wall Street.
Societe Generale said in a note that hedge funds were cautious on U.S. equities, keeping short positions on the S&P 500 and the Russell 2000, though they were net long on Japanese equities.
Japan’s Nikkei average rose 1.8%, snapping a three-day losing run, and the pan-European FTSEurofirst 300 rose 1.5%.
World equities measured by MSCI All-Country World Index advanced 1.2%, extending the previous session’s 0.5% rise and further recovering from Monday’s 1.6% loss.
Emerging market stocks climbed 2%.
POSITIVE DISTRACTION
The improvement in sentiment also boosted the euro and high yielding currencies such as the Australian dollar, which was up 1.3% at $1.0658 after hitting a 29-year high of $1.0662.
“Investor focus is on the earnings season in the U.S. and this is key in driving growth expectations and pushing stock markets higher. This keeps focus away from the euro zone periphery right now,” said Manuel Oliveri, currency strategist at UBS in Zurich.
The euro rose 1.4% to $1.4538, while the dollar fell 0.9% against a basket of currencies.
The soft dollar added to the boost for commodities, with copper up 1.6% and Brent crude up 1.1% to below $123 a barrel, recovering from a 1.7% drop in the previous two sessions.
Gold breached $1,500 an ounce for the first time and silver hit a 31-year high.
Yields on 10-year Spanish government bonds fell 3 basis points to 5.47% after Spain saw solid demand for 10- and 13-year bonds at an auction, though speculation of debt restructuring by Greece forced Madrid to pay higher yields than a month ago to attract investors.
“The average yields (were) both a shade lower than where they were trading in the secondary market heading into the sale,” said Richard McGuire, rate strategist at Rabobank.
“All in all, relatively reassuring results providing no indication Spain’s decoupling from the periphery is under immediate threat. That said, the risk of contagion has certainly not been taken off the table.”
Article provided via the Financial Post
http://business.financialpost.com/2011/04/20/world-stocks-climb-on-upbeat-earnings/
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