Forexpros Weekly Wrap-Up 26 October 2012

Closing the Week with Forexpros

by Forexpros Staff

The dollar fell against most major currencies on Friday after U.S. third-quarter gross domestic product growth rates beat market expectations, fueling appetite for risk.

Fears Greece may run into fresh financial woes sent investors back to the dollar, however, dampening a would-be risk-on trading session.

In U.S. trading on Friday, EUR/USD was up 0.02% at 1.2937.

The U.S. economy grew 2.0% in the third quarter, according to advance estimates released by the Bureau of Economic Analysis, well above 1.3% in the previous quarter.

The number beat analysts’ forecasts for 1.9% economic growth in the third quarter, which sparked demand higher-yielding assets and enticed investors out of the safety of the greenback.

Elsewhere in the U.S., Thomson Reuters/University of Michigan final survey on October consumer sentiment fell to 82.6 from a preliminary reading of 83.1.

Analysts had expected the index to tick down to 83.0 in October, though growth expectations fueled optimism in the session.

Brewing concerns that the European debt crisis may be rekindling in Greece watered down the mood.

German Finance Minister Wolfgang Schaeuble reportedly said doubts have arisen as to whether Greece will meet bailout requirements.

Elsewhere, an International Monetary Fund report found that Greek debt is poised to exceed targets agreed upon with international lenders, though Greece allayed worries by stating an agreement on an austerity package was being held up just by opposition from a coalition ally.

Earlier this week, Greece said its European and IMF creditors gave it more time to push through austerity cuts though E.U. officials said otherwise, which prevented the euro from rallying.

Concerns the debt crisis may reheat in Greece dampened a risk-on rally. The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.12% at 1.6099.

The dollar was down against the yen, with USD/JPY trading down 0.84% at 79.62 and down against the Swiss franc, with USD/CHF trading down 0.03% at 0.9350.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD trading up 0.33% at 0.9982, AUD/USD up 0.22% at 1.0370 and NZD/USD trading up 0.57% at 0.8228.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.05% at 80.13.

Gold

Gold futures traded down during the European session Friday, as a stronger greenback combined with Global growth concerns and GDP anticipation pressuring the yellow metal but then surged in New York after U.S. GDP numbers were announced.

On the Comex division of the New York Mercantile Exchange, Gold futures for December delivery traded at USD1704.05 a troy ounce during the European session falling 0.52%, but then rose sharply in the second and third hours of trading to briefly top USD1717, before settling back to close at USD1711.85.

It earlier traded at a session low USD1703.65 a troy ounce. Gold was likely to find support at USD1699.65 and resistance at USD1731.25.

Sentiment improved briefly on Thursday, after the U.S. National Association of Realtors said its pending home sales index rose by 0.3% in September, below expectations for a 2.1% gain.

The data came after a government report showed that durable goods orders, which include transportation items, jumped by a seasonally adjusted 9.9% in September, compared to expectations for a 7.1% gain.

Excluding volatile transportation items durable goods orders rose by a seasonally adjusted 2.0% last month, beating expectations for a 0.8% gain.

Separately, the Labor Department said the number of people who filed for unemployment assistance in the U.S. last week fell to 369,000, from 392,000 the previous week, compared to expectations for a decrease to 370,000.

The Fed also said it planned to keep its benchmark short-term rate close to zero through mid-2015.

The Federal Reserve said in September it will purchase an average of USD40 billion of mortgage-backed securities a month until the economy shows significant improvement.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.

Elsewhere on the Comex, Silver for December delivery fell 1.02% to trade at USD31.738 a troy ounce while Copper for December delivery fell 0.53% to trade at USD3.532 a pound.

Oil

Crude oil futures dropped on Friday before rallying to close for a slight gain at USD86.17, amid speculation U.S. economic growth won’t be enough to boost demand amid increasing stockpiles, as investors eyed the release of preliminary U.S. gross domestic product data later in the day.

On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded as low as USD85.19 a barrel during European morning trade, tumbling 1%.

Sentiment improved briefly on Thursday, after the U.S. National Association of Realtors said its pending home sales index rose by 0.3% in September, below expectations for a 2.1% gain.

The data came after a government report showed that durable goods orders, which include transportation items, jumped by a seasonally adjusted 9.9% in September, compared to expectations for a 7.1% gain.

Excluding volatile transportation items durable goods orders rose by a seasonally adjusted 2.0% last month, beating expectations for a 0.8% gain.

Separately, the Labor Department said the number of people who filed for unemployment assistance in the U.S. last week fell to 369,000, from 392,000 the previous week, compared to expectations for a decrease to 370,000.

The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.

Separately, investors were also focusing on tensions between Syria and Turkey and the possibility that Iran could support Syria in such a dispute.

Violence also spilled over to neighboring Lebanon in recent days, fuelling concerns over a region-wide conflict.

Countries in the Middle East and North Africa were responsible for 36% of global oil production and held 52% of proved reserves in 2011.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery dropped 0.94% to trade at USD107.47 a barrel, with the spread between the Brent and crude contracts standing at USD22.28 a barrel.

Natural Gas

Natural gas futures continued the selloff during the European session Friday, as profit takers punished the commodity despite Thursday’s report from the U.S. Energy Information Administration indicating U.S. gas supplies rose broadly in line with market expectations last week.

On the New York Mercantile Exchange, natural gas futures for delivery in November traded at USD3.386 per million British thermal units during European action, plunging 1.38%.

On Thursday, the U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended October 19 rose by 67 billion cubic feet, in line with market expectations.

Inventories rose by 95 billion cubic feet in the same week a year earlier, while the five-year average change for the week is an increase of 65 billion cubic feet, according to U.S. Energy Department data.

Total U.S. natural gas storage stood at 3.843 trillion cubic feet as of last week. Stocks were 153 billion cubic feet higher than last year at this time and 251 billion cubic feet above the five-year average of 3.592 trillion cubic feet for this time of year.

U.S. natural gas stocks peaked at a record 3.852 trillion cubic feet in November of last year.

Stocks

U.S. stocks ended higher on Friday following a choppy session, rising after stronger-than-expected economic growth numbers published in the U.S. though weak earnings weighed on the rally.

At the close of U.S. trading, the Dow Jones Industrial Average rose 0.03%, the S&P 500 index was down 0.07%, while the Nasdaq Composite index was up 0.06%.

Leading Dow Jones Industrial Average performers included Microsoft, up 1.18%, United Technologies, up 1.16%, and Intel, up 1.15%.

The Dow Jones Industrial Average’s worst performers included JPMorgan Chase, down 1.22%, Bank of America, down 1.19%, and Procter & Gamble, down 0.91%.

European indices, meanwhile, finished higher.  After the close of European trade, the EURO STOXX 50 rose 0.51%, France’s CAC 40 rose 0.69%, while Germany’s DAX 30 finished up 0.44%. Meanwhile, in the U.K. the FTSE 100 rose 0.03%.