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European equities are set to gain on the open following overnight rally in the US. A late in the session rally over in the US turned what was going to be an ugly day in to a triple digit winner. The indices were rather down beat following the upbeat assessment of the US economy at the FOMC and were taken a-back by the lack of dovishness. However, Janet Yellen must have been watching the markets as she came to the rescue when, at a meeting with Senate Democrats, she said that she wasn’t going to raise rates immediately.
The US jobless claims tumbled to the lowest level in nearly 15 years spurring optimism on the employment sector which spilled over into the equity markets. The Dow Jones rallied 279 points towards the close to 17,475 effectively recouping the previous day’s losses.
The wide consensus out there is that the US dollar should stay strong as the divergent policies on each side of the Atlantic are here for quite some time. Especially high yielding currencies suffer from a slump in commodities prices which are driven by over capacity build with cheap debt. However, the single currency gained 30 pips versus the dollar to 1.1318.
The plunge in crude prices continued early in the day on Thursday to fresh six year low of $43.59 on the back of ongoing rise in production. Nonetheless the WTI managed to stage a mild recovery later on closing slightly up at $44.60 a barrel on light position squaring.
Gold prices were again under pressure as they lost $25.5 to $1258.2. Headwinds might come from production surplus for this year and a strong dollar. At the same time though, the geopolitical risk should offer some support limiting the downside.
Marius is a Dealer at Capital Spreads. His involvement with CFDs and spread betting started in 2008 after graduating from London Metropolitan University with a MSc in Finance. He contributes to the Daily Comment by providing a snapshot of the FX, indices and commodity markets (oil and gold).
Jonathan is a dealer at Capital Spreads. Having started his career in the city trading interest rate and bond derivatives in 2005, he then entered the spread betting and CFD industry in 2007 by joining the dealing desk at City Credit Capital. After successfully managing multiple asset risk books across the European, US and Asian time zones throughout the height of the financial crisis, he then took that experience to Capital Spreads in 2010.
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