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Market Wire Update:
Equity/Dollar/Oil Link- Chicken or Egg
The perfect intra-day storm hit Wall Street on Thursday mid-day trade, or was it that it hit Chicago first, and then moved east? Either way, the low volume intra-day reversal was initially seen in equity trade (Wall Street), and that seemed to allow commodity futures (Chicago) to take a stance against the sideways crawl that tested support areas that had recently held.
The short side of the dollar was then involved in a 30 minute period of trade that followed breaking news from the financial and insurance sector that bolstered equities for a second run, and before anybody could say “automated, low volume, short squeeze”, the moves were underway.
In a thin liquidity market there are gaps all over the bid/ask prices, as the market lacks large enough block orders to plug all price point holes. As such, all it takes is a few price points to get missed, some large orders to be moved, and the inter-connected global market is off and running.
The pattern looked to be Equities (S&P 1029)-Oil (72.70)-Dollar (78.00(, but whether the financial chicken, or the egg, came first, it is oil and the dollar that are more easily holding the moves. Wall Street is trading around the flat line on stocks, and Chicago is sitting on 2% gains in oil, and a 1% loss on the dollar index.
The major pairs all had a go at the greenback, with the Swiss franc (1.0580) gaining at the fastest rate, against the dollar and the Eur (1.4360) and Gbp (1.6280). The yen (93.48) looked to be just going along for the ride, but both cable and yen moved in very unconvincing styles.