The dollar rallied across the board in afternoon trading, jumping past the 107-level against the yen and pushing the sterling to 1.9950. Propping the currency higher today was a combination of a better-than-forecasted earnings report from JP Morgan, further pullback in the price of oil to beneath $130 per barrel and a sharply better than expected housing starts report. Given the heightened uncertainty over the stability of the US financial market, earnings reports from JP Morgan and Wells Fargo quelled immediate fears of further rapid deterioration particularly in light of the recent failure by regional bank IndyMac and the turmoil stemming from Freddie Mac and Fannie Mae. Meanwhile, crude oil continued its steep decline, falling by nearly 11% in 3-days to its lowest level since early June at $129.45 per barrel. The major equity bourses lauded the news, with the Dow Jones and Nasdaq both rallying by over 1% by the New York afternoon.The US economic calendar consisted of weekly jobless claims, June housing starts, building permits and the July Philadelphia Fed manufacturing survey. Weekly jobless increased by less than expected to 366k, from 346k a week earlier. Housing starts in June surged by 9.1% to 1.066 million units from 975k units a month earlier in May. Building permits also jumped higher, rising by 11.6% to 1.091 million units, up from 978k units in the previous month. However, the Philadelphia Fed manufacturing survey missed estimates for an improvement to minus 15, instead improving slightly to minus 16.3 from minus 17.1 a month earlier. The employment index deteriorated to -7.3 from -6.9, while the prices paid index spiked to its highest level since March 1980 at 75.6 from 69.3.
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