US Dollar Strength, Rise in Crude Oil Cap Gains in Gold

Asian markets are trading lower today on the back of delay in the decision over Greece’s second bailout and Moody’s downgrade warning to the global banks. This increased concerns with respect to Euro Zone debt worries and led to rise in risk aversion in the global markets.

Moody's Investors Service warned today that it may downgrade the credit ratings of 17 global and 114 European financial institutions. This indicated another sign that the impact of the Euro Zone debt crisis is spreading throughout the global financial system.

The US rating agency also stated that its action on financial institutions from 16 European nations indicates the impact of the debt crisis and deteriorating creditworthiness of its governments.

The European economy witnessed a decline in GDP for the fourth-quarter 2011 for the first time in almost 3 years. The debt crisis in the 17-nation Euro Zone coupled with crippled efforts by the European policymakers to deal with the crisis has led to slowdown in the region. GDP for the fourth-quarter 2011 slipped 0.3 percent as against a rise of 0.1 percent in the previous quarter.

US Empire State Manufacturing Index increased to 19.5-level in February as against previous mark of 13.5 in last month. Treasury International Capital (TIC) Long-Term Purchases was at $17.9 billion in December from earlier $61.3 billion in November.

Capacity Utilization Rate in the US increased by 78.5 percent in January compared to 78.6 percent a month ago. Industrial Production remained unchanged in January when compared to rise of 1 percent in December. National Association of Home Builders (NAHB) Housing Market Index increased to 29- level in February from 25-mark in prior month.

UK’s Nationwide Consumer Confidence increased to 47-level in January from previous mark of 38 in December.

Foreign Direct Investment declined by 0.3 percent in January compared to previous rise of 9.7 percent in December.

On account of uncertainty over concerns with respect to Euro Zone debt crisis, we expect market sentiments to remain weak today. Taking cues from this, we expect the US dollar to trade higher.