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Current Futures: Dow +159.00, S&P +15.60, NASDAQ +31.00
The U.S. stock market has surged higher just before the Federal Open Market Committee released their recommendation to hold at the historically low overnight rate of 0-0.25. The report stated that even though economic activity is relatively weak at the moment, policy actions and market forces will eventually help economic growth resume. Federal Reserve officials feel that the economy is becoming more stable and that severity of the recession is waning. The vote was 10-0 in favor of leaving the rate at historic lows.
Earlier in the U.S. session a report indicated that the trade deficit of the United States widened less that analysts estimates during June. The gap has increased 4 percent or by 27 billion according to the Commerce Department while analyst estimates were for a -28.4 billion. Exports were shown as gaining 2 percent as demand grew for goods such as aircraft engines. Imports also rose 2.3 percent due to the recent high cost of oil.
“It appears that the global recession is beginning to wind down,” stated TheLFB-Forex.com Trade Team Members, “We are seeing signs of growth emerging from overseas which is helping to revive U.S. exports.” The weaker dollar has help spur demand in overseas markets which is key to an expanding economy.
The Dow Jones Index gained 169.66 points (1.84%) to 9,411.11, while the S&P 500 index added 16.77 points (1.69%) to 1,011.12.
Crude oil for August delivery was recently trading at $70.05 per barrel, higher by $0.60.
Gold for August delivery was recently trading up by $0.50 to $948.10.
Treasuries dropped slightly on the day as the Fed plans to slow the pace of it $300 billion program of buying government bonds as the recession passes. The report stated that the Fed plans to extend the duration of the program but not the dollar amount. Yield on the 10-year note rose 3.9 basis points to 3.67%.
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