Risk taking remained prevalent as more positive corporate earnings reports coupled with subsiding fears of another financial company meltdown helped stocks extend last week's gains. The news that CIT bondholders may help the company avoid bankruptcy was taken very well by the bulls indeed. The S&P jumped more than 1% to its highest close this year at 951. The intraday high of 956.23 was not contested today, but will be one to watch as the week wears on. Commodities caught a nice bid as well, as inter-market correlations remained strong. This lifted Gold by more than $11 towards a 948/949 close. The top of the cloud lurks at 953.64 and a close above there should see further gains in the short-term.

The rally in risk saw the USD come under pressure and the DXY index slipped -0.9% on the day. EUR/USD closed near the intraday high of 1.4249 after seeing a session low of 1.4198, following the ebb and flow in equities. The yen held its own despite the risk taking. EUR/JPY was actually a touch lower by 134.00 after a session high near the 134.70 level. USD/JPY meanwhile slipped from a high by 94.70 towards 94.20 ahead of the NY close. Fed Chairman Bernanke's economic testimony before the House tomorrow will be closely watched and should elicit some decent moves in ''risk''.

The currencies of the resource-based economies were mixed. AUD/USD carved out a bottom near 0.8100 support and was sitting near 0.8170 recently. USD/CAD was actually sitting about 20 pips above the NY open despite the rally in commodities. With the Bank of Canada in focus tomorrow morning, traders remained cautious. The bank noted concern with regards to Canadian dollar strength in their last communique and should they reaffirm these worries, we would look for the USD/CAD to push higher still.

Upcoming Economic Data Releases (Asia Session) prior expected

  • 7/20 22:45 GMT NZ  Visitor Arrivals  JUN  0.20%  - -
  • 7/20 23:50 GMT  JN  BOJ to Release Board Meeting Minutes  20-Jul  
  • 7/21 1:30 GMT AU  Reserve Bank's Board July Minutes  21-Jul  
  • 7/21 3:00 GMT NZ  Credit Card Spending (YoY)  JUN  -2.40%  - -
  • 7/21 5:30 GMT JN  Tokyo Dept. Store Sales (YoY)  JUN  -14.00%  - -
  • 7/21 5:30 GMT JN  Nationwide Dept. Sales (YoY)  JUN  -12.30%  - -