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Dollar Down on Euro Hopes

The USD has had a mixed period in US and Asian trading sessions. Initial gains were made following on from  the Commerce Department in the US reporting the largest number of issued building permits in the housing market for February since Oct 2008. However, with Federal Reserve Chairman Ben Bernanke declaring that it his belief the debt problems of Europe are dissipating. To further bolster the Euro was the Greek parliamentary approval of the plans of Prime Minister Lucas Papademos to accept the 172 bn Euro bail out money based on the measures set out by the ECB, EU and IMF.

The renewed hope of Europe saw investors move out of the USD into the EUR and other currencies. The EUR/USD was up 0.36% at time of writing (7.08AM GMT), trading at 1.3272. In the USD/JPY pairing, the greenback was down 0.10%, trading at 83.63 Japanese Yen. The abandonment of the USD for other currencies and the commodity markets saw the US Dollar Index decline 0.29%, valued at $79.64.

The weakened USD meant that there are gains in the commodity market. Gold, the traditional hedge to the US Dollar was up by 0.42%, trading at $1653.95. When the greenback falls, the precious metals which trade in US Dollars become cheaper to buy. The real mover in the markets as European trading is about to begin has been Silver, up to a high of 32.278 from a low of 32.040 before rallying to 32.188, an increase of 1.11%. Crude Oil also enjoyed gains even though Saudi Arabia, the world’s largest producer of oil, and currently producing 9.9 million barrels every day, pledged to increase its output by 25% if needed. The initial 2% drop in crude oil prices following on from the Saudi’s pledge, failed to override increasing concerns that oil prices are heading towards the $147 level of 2008. Oil is presently up 15% for 2012, fueled by Iranian sanctions and Middle East tensions. Crude Oil was trading at $106.49, up 0.40% at time of writing.

Expect increased volatility for the GBP as the Bank of England release their minutes ahead of the Budget today. This is at 09.30am GMT, with the UK Budget presented to parliament at 12.30 GMT.

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