Asia Morning: U.S. Stocks Climber Higher, Dollar Weaker

Fundamental analysis of Forex market

On Wednesday, U.S. stocks ended again in positive territory, led by blue-chip stocks. The Dow Jones Industrial Average jumped 373 points (+1.39%) to 27201, the S&P 500 gained 21 points (+0.64%) to 3327, and the Nasdaq 100 was up 28 points (+0.26%) 11125, a fresh record high.

Dow Jones Industrial Average: Daily Chart

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Market sentiment was held up by news on COVID-19 vaccine development and lawmakers working towards concluding a new economic relief package.

Consumer Durables & Apparel (+2.94%), Capital Goods (+2.46%)and Automobiles & Components (+2.4%) sectors performed the best. Airline stocks – American Airlines (AAL +9.5%), United Airlines (UAL +4.46%) and Delta Air Lines (DAL +3.12%) – were among the top gainers. Walt Disney (DIS +8.8%) rose after releasing 3Q results.

Regarding U.S. economic data, the Automatic Data Processing (ADP) jobs report showed a gain of only 167,000 private jobs in July, well below an addition of 1.2 million jobs expected. The ISM Services Index increased to 58.1 in July (55.0 expected). Trade deficit narrowed to 50.7 billion dollars in June from 54.8 billion dollars in May.

Due later today is a report on Initial Jobless Claims (an increase to 1.4 million for the week ended August 1 expected).

European stocks were broadly higher. The Stoxx Europe 600 Index rose 0.49%, Germany’s DAX 30 climbed 0.47%, France’s CAC 40 gained 0.90%, and the U.K.’s FTSE 100 jumped 1.14%.

The benchmark U.S. 10-year Treasury yield stepped up to 0.549% from 0.520% Tuesday.

Spot gold price showed no signs of fatigue after conquering the key level of $2,000 an ounce, advancing $18.00 to $2,038. Meanwhile, Spot Silver price jumped 3.6% to $26.94 an ounce.

Oil prices increased after the U.S. Energy Information Administration (EIA) reported a surprise reduction of 7.4 million barrels in crude-oil stockpiles. U.S. WTI crude oil futures (September) gained 1.2% to $42.19 a barrel.

On the forex front, the U.S. dollar weakened further as general risk sentiment improved. The ICE U.S. Dollar Index lost the 93.00 level again.

EUR/USD rebounded for a second day rising 0.5% to 1.1863. Short positions on the euros should have been squeezed.

GBP/USD crossed above the 1.3100 level.

Official data showed that Retail Sales in the Eurozone grew 5.7% on month in June (+5.9% expected).

In Europe, July Markit Services PMI (final reading) for the Eurozone posted at 54.7 (vs 55.1 expected), Germany at 55.6 (vs 56.7 expected), France at 57.3 (vs 57.8 expected) and the U.K. at 56.5 (vs 56.6 expected).

USD/JPY remained under pressure closing at 105.60.

AUD/USD added 0.4% to 0.7191.

USD/CAD dipped below the key level of 1.3300 closing at 1.3266 extending its losing streak to a fourth session.