Forex
The USD Index is up over .5% for the second consecutive day; even though today’s Existing Home sales and Durable Goods reports were quite unimpressive. This data, however, could not drag down the USD today, as it is trading higher vs. every major currency except GBP and CAD. USD/JPY is up over 1% for a second straight day, and is currently trading above 110 after hitting a 2.5 yr low in the mid 107 range on Monday. USD/JPY is likely to pull back from its recent surge, especially if flight to quality re-establishes precedence. EUR/USD is higher for a second consecutive day, however, pulled back a bit following the release of the Beige Book. Tomorrow’s preliminary GDP is expected to show a 1% improvement from the advance reading. Any potential surprise is likely to the downside, which should yield some USD selling pressure. Only time will tell if the USD can maintain its recent momentum, or if the past two days have been nothing more than a rest-stop on the path of sustained deterioration.