(CEP News) – North American equity markets held modest gains following a late sell-off on Tuesday. March was a very positive month for U.S. equity markets, as both the Dow and the S&P saw their biggest one-month gains since October of 2002.

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The last trading day in the first quarter of 2009 has ended with a bang. The U.S. dollar sold off against most of the major currencies as repatriation flows come to an end. U.S. economic data was weak, but not a game changer and therefore currency investors chose instead to focus on the positive implications of Japan’s stimulus package and the IRS’ new tax break for U.S. car buyers. The currencies that are performing the best against the U.S. dollar are the ones whose central banks are not expected to adopt quantitative easing, namely the Australian New Zealand dollar.

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The New Zealand dollar sold off aggressively in late U.S. trading on surprisingly dovish comments from the RBNZ. Having already cut interest rates by 525bp, the central bank is now suggesting that either more rate cuts may be needed or that they could start buying long term bonds.

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1-minute chart at 8.13 am Malaysia

A crazy spike which must have caught the bulls off guard. Is someone trying to pull our legs on the April Fool’s Day?

I was lucky to be on the right side of the spike…

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The patchwork of attempts to prop up the financial system has taken on a life of its own – we call it bailout economics. At every step, Adam Smith’s “invisible hand” to guide the economy has become less evident. Back in the 18th century, the economist coined the term as…

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The EURUSD didn’t make a significant movement yesterday. The pair attempted to push higher, topped at 1.3341 but closed lower at 1.3248. On 4h chart below we can see that the pair is in bullish correction phase after had a significant bearish momentum from 1.3735. The bias remains neutral in…

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Quarter-end dynamics push sentiment higher. A feature of yesterday’s afternoon and evening sessions was the bounce in risky currencies around the quarter-end fixings. Equities rebounded on seemingly little more than a broker upgrade for Microsoft and abating nervousness regarding the banking sector. The Eurostoxx closed up 4.1%, followed by the…

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The dollar fell versus other key currencies but gained against the yen on Tuesday. Equities and risk appetite rose despite weak economic data. The OECD forecasts that the world economy will contract 2.7% in 2009, while world trade will fall 13.2%. US home prices showed record losses, the Chicago PMI…

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The theme of today’s session was a pullback in risk aversion, and a retracement of the moves seen the last two sessions, especially in regards to Yen crosses. Though shares were down in Tokyo, Europe saw an upbeat end to the last trading day of the 1st quarter. That sense…

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March 31 (Bloomberg) — Rogelio Ramirez de la O , the Mexican economist who predicted the 1994 peso devaluation, abandoned his call for further declines in the currency this year after President Felipe Calderon said he was seeking a credit line with the International Monetary Fund.

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(RTTNews) – The US dollar edged down to 13.9972 against the Mexican peso by about 9:20 am ET on Tuesday. This set a 12-day low for the US dollar. Thereafter, the pair reversed its direction and as of now trading near 14.17. The greenback closed yesterday’s New York session at 14.2884.

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April 1 (Bloomberg) — The yen traded near a three-week low versus the dollar after posting its biggest quarterly loss since 2001 before a Bank of Japan survey forecast to show sentiment among manufacturers fell to the lowest in more than 30 years.

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Wall Street gave a tentative “thumbs up” Tuesday to the long-awaited debt refinancing of Ingersoll-Rand Co. Ltd., which borrowed heavily to transform itself into a diversified manufacturer.

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MOSCOW, March 31 (Reuters) – The Russian rouble firmed in early official trade on Tuesday to a weighted average for tomorrow settlement of 33.9032 per dollar compared with 34.0134 the previous session.

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April 1 (Bloomberg) — The yen fell against the dollar, extending its worst quarterly loss since 2001, after a Bank of Japan survey showed business sentiment dropped the most on record, reducing demand for the currency.

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(CEP News) – Federal Reserve Bank of Philadelphia President Charles Plosser criticized the Fed’s lending programs on Monday for failing to establish clear guidelines.

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(CEP News) – Record low inflation coupled with ongoing declines in consumer sentiment and economic activity will leave the European Central Bank with little choice but to reduce its main refinancing rate yet again, economists say.

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(CEP News) – U.S. equity markets have retraced almost half of Monday’s losses and are trading near strong resistance levels despite apprehension over the U.S. auto industry.

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Retail sales show gains, could indicate economic turnaround

The U.S. economy might be on the road to recovery, if one looks at retail sales data. Even though consumer confidence remains near historic lows, there has been some gains in spending. The Street reports on the improvement in retail sales since November:

A sharp turnaround in retail stocks since November could be hinting at an economic recovery sooner than economists are predicting, although analysts are unsure whether the valuation and sentiment is a good mix for investors looking to bet on a rebound. 

As you can see, there are some misgivings about this turnaround. However, if retail sales are hailing an economic recovery, it is likely to result in more weakness for the U.S. dollar. Things have been volatile the last couple of days, but as things improve on the global economic stage, the greenback is likely to even out a bit — on the downside.

See Also

• U.S. Dollar in Forex Trading
  What happens to the dollar as an economic recovery takes place?

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