The USD Downtrend, Stocks Higher

Asian stocks were on the rise though the overnight session continuing their gains from the US session. Although growth data in the US economy was weaker than expected this made investors happy as it can only help speculation that the US Fed Reserve will continue their quantitative easing longer than expected. Yesterday GDP in the US did show some growth of 1.8 per cent on the year for the first quarter; however this is a drop in the last quarter’s rate of 2.4 per cent. Analysts and investors alike had expected the rate of 2.4 per cent to continue into this quarter and perhaps even surprised Fed reserve members after last week’s strong data releases.

Some positive data came out of China which demonstrated profits for industrial companies of 15.5 per cent in May. The overall rate of industrial output in the world’s second largest economy was 12.3 per cent higher.

Australian stocks performed well too, in the Asian session with the benchmark index gaining after former PM Kevin Rudd retook his seat in power following current PM Julia Gillard losing hers as it appeared she wouldn’t have enough seats to stay in power.

Stocks
All world indices performed broadly higher including in Asia with Japan’s Nikkei 225 climbing 2.53 per cent, ,the Australian S&P/ASX 200 gained 1.74 per cent and the Hong Kong Hang Seng climbed 1.56 per cent. Calming Chinese worries over their liquidity as well as the strong output data saw the Shanghai Composite climb up 1.01 per cent.

Forex
The USD finally reversed its positive trend to the downside with losses against the Eur – -0.16 per cent, the GBP – -0.17 per cent and the JPY – -0.02 per cent. As commodities spiked this helped the commodity linked currencies to again with the AUD climbing 0.45 per cent and the Canadian dollar gaining 0.36 per cent.

Commodities
Gold touched a 3 year low yesterday and then reversed losses to climb 0.91 per cent while Silver was up 1.06 per cent boosted by investors taking advantage of the metals losses. Crude oil rallied after weak inventory supply data and was up 0.37 per cent.

What to watch today:
An exciting trading day today with plenty of economic events to fill the calendar. UK’s GDP in the morning then unemployment and jobless numbers out of Germany. Investors should also watch out for the Italian 10-yr debt auctions and U.S. pending home sales in the US session.