Dollar didn’t budge

Even though equities presented a dramatic move during yesterday’s session, the Dollar
hardly moved, as the index continued to trade around its recent levels.
This type of price movement has now raised many questions regarding
further weakness in the equity market. From a fundamental point of
view, the Dollar has shown a strong correlation with the equity market,
increasing on market skepticism and decreasing, as risk appetite has
returned into the markets.

Could the Dollar index be telling us that the current drop in equities is only going to be a mild correction?

On
individual pairs the EUR/USD continued to trade above support of
1.3756, while the GBP/USD remained stuck between minor range of
1.6220-1.6621. The major mover of the day was the USD/CAD climbing
dramatically, as crude oil lost its ground. Even though the pair
smashed through its 61.8% Fibonacci level, presenting an enormous
rally, CAD traders should still be cautious as the price is now
approaching trend line resistance. In addition the recent trend did not
receive backing from broader Dollar strength.

Gold
continued to drift lower on expectation that inflationary problems
wouldn’t be an issue, while the bond market climbed higher, as money
exited stocks.

Market Data to Watch Out For

Unlike yesterday’s schedule eyes will focus on the economic
calendar today as a wave of data is scheduled to be released. Starting
with European data, Germany and France are scheduled to release their
manufacturing and services PMI, both expected to show an increase in
activity. Towards afternoon hours the U.S will take center stage
releasing its housing data. Existing home sales should have an impact
on today’s session as the market have priced in an increase of 4.81m
compared to a previous 4.68m


To view the full economic calendar click here.