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Slightly weaker USD in early morning trade

Tue, Oct 27 2009, 07:47 GMT
by Danske Research Team

Danske Bank A/S


Key news

Lower commodity prices and concerns about tighter financial regulations’ impact on bank earnings sent stock markets lower. However, little change since market close in Europe.

US bond yields edge higher as supply concerns outweigh less risk appetite and a reasonably well received auction of 5-year TIPS

Slightly weaker USD in early morning trade following yesterday’s sharp appreciation

Markets Overnight

In the US S&P 500 closed down more than 1%, however with little change since market close in Europe yesterday. The decline in stock prices was mainly driven by sharp declines in resource stocks and financials on the back of lower commodity prices and concern that tighter financial regulation could weigh significantly on bank earnings. According to press reports Bank of America will not be allowed to repay federal bailout funds immediately because its capitalisation is deemed insufficient and the Congress has introduced legislation that will give the US Treasury considerable freedom to close troubled banks.

Asian stock markets this morning take their lead mainly from the US and are lower across the board.

With the Fed ending its USD300bn treasury buying programme and auctions of two-year, five-year and seven-year notes this week US bond yields yesterday edged higher despite some risk aversion returning to the market and a reasonably well-received auction of five-year inflation protected bonds.

In the FX market USD weakened slightly in early morning trade following its sharp appreciation yesterday. Overall, USD is trading largely unchanged against both EUR and JPY since market close in Europe yesterday. In Scandinavia both NOK and SEK are largely unchanged in overnight trade.

Crude oil prices have only recovered slightly in overnight following yesterday’s plunge.

Published on  Tue, Oct 27 2009, 07:51 GMT


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