Euro Dropped for Weaker Global Economy while Gold Gained Ground
Despite notable gains on Friday, U.S. stocks drifted lower for the week on weaker global growth projections. The Dow lost 1.0 percent, while the S&P and the NASDAQ retreated 0.6 percent and 0.5 percent, respectively.
Indeed, stocks advanced on Friday after previous day’s sharp losses as Moody’s downgraded 15 financial firms. Yet, Chinese, European and U.S. manufacturing data, disappointing housing and jobs reports indicated that global economy is losing ground. Meanwhile, the Fed unchanged the rates and its monetary policy, disappointing markets as investors had speculated Federal Reserve will ease its monetary stance to stave off recession.However, the Fed said the bank cut its growth forecast for American economy in the face of weaker jobs and manufacturing horizon.
The currency pair EUR/USD dropped for the first time in three weeks as the Fed disappointed markets by unchanging its monetary stance despite extending its asset purchasing program by $267 billion. In the meantime, global economic slowing from the U.S. to China spurred investors to sell risky assets across the board.
Given deepening crisis in Europe and weaker economic fundamentals in the U.S., gold advanced for the first time in five days on bargain hunting. Yet, the precious metal posted notable losses for the week, ending at $1,566.90 an ounce on the Comex division of the New York Mercantile Exchange.
Looking ahead, we will pay close attention to new home sales, S&P Case Shiller HPI, consumer confidence, durable goods orders, pending home sales, GDP, weekly jobless claims, personal income and outlays, Chicago PMI and all important consumer sentiment in succession.
- Worsening Crisis in Greece and Spain Pushed the EUR/USD Below 1.3000 (1.000)
- Forex Traders Still Need to Focus on the Political Development in Greece and Spain (1.000)
- Greece Failed to Form a New Government, Pushing the Euro Fall for the Second Week (1.000)
- Potential Euro Exit by Greece Hit the Euro Fall against USD again (1.000)
- Deepening Greek Government Crisis Brings Constant Damage to both Euro and Gold (1.000)