Daily Futures Commentary August 18, 2009

Tuesday, August 18, 2009

The U.S. Dollar is trading lower overnight following a strong two-day rally. Yesterday the Dollar rallied sharply higher versus all major currencies with the exception of the Japanese Yen as investors became risk averse for risky assets following a hard sell-off in the Chinese stock market.

Today is expected to be a different story as the Dollar is reacting to the news that an increase in German investor confidence was greater than experts had forecast. Overnight it was reported that the ZEW Center for European Economic Research Index of investor and analyst expectations rose to 56.1 in August from 39.5 in July.

This news came as a surprise to equity and currency traders triggering short-covering rallies in the September Euro and European stock markets. Yesterday these markets broke as traders dumped higher risk assets on the thought that their recent rallies were way ahead of the economy. This morning’s report is renewing optimism in the possibility of a strong Euro Zone recovery during the latter part of the year.

Coupled with last week’s news of unexpected growth during the second quarter in France and Germany, today’s news …
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