Gloomy Non-Manufacturing ISM report and pessimistic comments from NY Fed Reserve official Dudley, casting doubts upon further economic recovery, sent USD to a steep decline, the worst in the last 7 years.
US Services ISM report released on Wednesday revealed a striking discrepancy in the health of the US service sector in January, compared to December 2015. January data indicates a 2.3 points toughening decline to 53.5 points from 55.8 in December. As Fed’s decision to raise rates was made in December, the service sector has shrunk, which may indicate that toughening up the monetary policy was altogether premature.
The NY Reserve Bank head Dudley said that forecasts on global recovery ought to be more pessimistic. Those words ensured uneasy situation for the USD in the coming future. EUR/USD surged above 1.11 level, USD/JPY dropped from 120 to 117.50 level, USD/CHF lost almost 1%, declining to 1.0025. Although the American currency managed to partially reclaim its positions, the market seems to be selling it off very rapidly, building up pressure on the USD supporters.
WTI got relieved from bearish pressure due to weak Dollar showing a surge to the $33 level. Positive market sentiments beats the weekly EIA report with US crude oil inventories increasing by 7.8M barrels, aggravating the Oil surplus.
European and Asian indices are growing on the increased investors’ appetite for mining and energy companies. FTSE100 is up by 1.40%, BHP Billiton, Anglo American, Rio Tinto and Glencore (all miners) are the best performers with 12.44% and 8.02%, 7.60% and 7.19% gains respectively. DAX gained 0.42%, French CAC40 added 0.23%. Chinese CSI300 and ShComp advanced by 1.23 and 1.53% with no signs of stopping.
The Ruble failed to hold its position, the movement to 75 level is being interrupted by fears of a new drop in Oil prices, as surplus continues to increase. USD/RUB is at 76.55, without a clear trend.
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