The euro could retest parity if the USD index extends the rally
Wall Street equities advanced on Thursday, expending this week’s rally fueled by tech stocks as solid second-quarter earnings from major companies helped ease secession fears. Tesla railed nearly 10% after the auto maker reported stronger-than-expected earnings. On the data front, the leading economic index fell 0.8% in June to mark the fourth straight monthly decline. The Dow Jones Industrial Average index rose 0.5%, the S&P 500 gained 1.0% and the Nasdaq Composite finished 1.4% higher.
Asian equity markets were mostly higher today to record their best week in months on Friday. The Nikkei 225 in Tokyo rose 0.40% to make gains for a seventh successive day after Japan reported its inflation rose at a slower pace in June, with food prices growing 6.5% year-on-year compared to 12.3% in May. The Bank of Japan has indicated that it does not intend to raise its interest rate to counter inflation. Elsewhere, Korea, the Kospi in South Korea declined 0.66% and the Shanghai Composite index finished less than 0.1% lower.
Over in Europe, stocks were mixed-to-lower in early deals. Fresh data showed that the German manufacturing and services sectors entered into contraction in July, suggesting the downturn is gathering pace. The European Central Bank hiked its benchmark interest rate for the first time in 11 years on Thursday to suppress inflation in the eurozone. All eyes will now turn towards the Fed next week. US futures are keeping slightly lower in early pre-market trading.
The dollar rallied strongly on Friday after yesterday’s retreat. The USD index is back above the 107.00 figure and could exceed the 107.50 zone in the near term should risk sentiment deteriorate further. EURUSD fell today amid disappointing economic data out of Germany, adding to recession worries after yesterday’s rate hike by 0.5%. the pair slipped back below 1.0200 to extend losses to 1.0130, which implies the shared currency could challenge parity again if the pressure doesn’t abate any time soon.
