European Open USDNOK Remains Appealing to Bears
Bears have been the dominant force on USD/NOK these past few weeks, and they may not be done with the pair just yet.
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Investors bought back into risky asset classes countering yesterdays weakness after the minutes from last month’s FOMC minutes indicated the Fed are likely to act in a matter of weeks to stimulate the struggling US economy. Moreover, a strong sales forecast from tech bellwether Intel last night and positive earnings from JP Morgan has boosted optimism for a strong third quarter earnings season and year end sales figures.
What we have essentially is a number of positives out there for stocks, such as QE2, higher metal prices and company earnings, and these are all combining well to help motivate the bulls to take control.
The weak dollar is having a strong impact on equity markets and the FTSE 100 in particular. A weak dollar is encouraging demand for dollar denominated commodities and with many mining and energy stocks having such a strong weighting on the FTSE 100, this is helping to surge the UK Index to new 5 month highs.
The mining sector is higher by 3.25% in London so far, whilst the energy sector is higher by 1.31%. This is where most of the charge in the FTSE 100 has come from, with Xstrata, Anglo American and BP performing well in particular.
We have the DAX trading at fresh 2 year highs, the FTSE is hitting a new 5 month highs and both key European Indices have broken through yet more resistance levels. European Indices are continuing to show signs of strength and should we get through the earnings season without many hiccups, we could be set for a strong finish to the year.
Traders are now looking to target the 5833 level to see if the FTSE can break to a new 2 year high and this is acheivable considering the mometum seen since September.”
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