Oh, momma! Thanks to an onslaught of bearish reports across the markets, the dollar was able to triple roundhouse kick its major counterparts down the charts. EUR/USD fell to its 11-month low at 1.3029, while USD/CHF rocketed past its previous day high and ended the day at .9464. What gives?
A lot of things, apparently. For one thing, the investors weren’t happy that Germany continues to reject the proposal of increasing the European Stability Mechanism’s (ESM) 500-billion EUR budget. The refusal highlighted the region’s lack of cooperation when it comes to solving debt problems, and fueled risk aversion in markets.
And then there were also U.S. reports to consider. The retail sales reports from the U.S. largely missed expectations, printing only a 0.2% growth in November when market geeks were pegging the growth figure at 0.6%. Looks like the Black Friday sales didn’t help as much as analysts first thought! The disappointing figures not only dragged on the U.S. stocks, it also suggested that a faster employment growth is needed to fire up retail sales.
Last but definitely not the least is the Fed’s FOMC statement released a couple of hours ago. In its statement, the central bank maintained its stance on its interest rates, saying that a low rate might be warranted at least until mid-2013. But what disappointed market players more is the Fed’s lack of signals to launch a QE3. Though the Fed kept the option open for next year, the lack of QE rhetoric was enough for the dollar bulls to maintain their momentum.
Aside from the OPEC meetings, no major report is scheduled for release in the U.S. today. Keep your eyes peeled for reports from the euro zone though. Who knows, we might see more risk sentiment-driven price action today!