The lack of improvement in the housing sector continued to weigh on the US dollar, and kept traders from bidding the currency before the extended holiday weekend. Looking at price action, the low yielding Yen and Swiss franc rounded up the biggest gains against the US dollar. In turn the euro regained its footing and pushed back to yesterday highs just short of 1.58. The British Pound however held steady throughout the session as growth concerns led the currency to hold in the 1.98 range. The greenback also declined against the Australian and New Zealand dollar as commodity prices pushed higher - though the Canadian dollar didn’t join the crowd as traders squared their books for the weekend.
Rising commodity prices mixed with falling home prices pressed on the stock markets, and led investors to cutback on high risk-reward investments. As a result, the DJIA fell 145.99 points to 12,479.63 points, with 27 of the 30 components declining. The broader S&P500 also slipped 18.42 points to hold off at 1,375.93 points, with 172 stocks falling to a new 52 week low.
Heightened economic concerns fueled demands for US Treasuries, and led risk-adverse investors to seek the safe haven of risk-free bonds. As a result, the benchmark 10-Year yield fell to 3.852 percent from 3.911 percent, while the 2-Year yield plunged to 2.446 percent from 2.528 percent.
US capital markets will be closed through Monday due to the Memorial Day holiday; and the dollar will suffer from the low liquidity and could experience high volatility in turn. When US-based traders return to the markets, fundamentals will be there to meet them. Tuesday is packed with the S&P/Case-Shiller housing data, new home sales report and consumer confidence. Looking over the entire week’s listings, there will be particular interest in the first quarter GDP revision which is expected to benefit from a boost in consumer spending and exports.
