Global Equity Markets Tumble Along WIth The Greenback

Wall Street equities closed in the negative territory yesterday due to ongoing concerns about global economic growth as well as news of the third confirmed case of Ebola in the United States. European markets were whipped Wednesday, dropping to their lowest in more than ten months amid further signs the global economy has hit a rough patch.

Asian markets are mixed this morning as traders look at US data and comments from the Federal Reserve. Figures from the US showed that retail sales retreated in September while producer prices also fell. Meanwhile, the US Federal Reserve’s Beige Book report said the US economy was growing at about the same modest pace it had maintained in recent months. Hong Kong stocks retreated this morning, following the weak regional trend on a U.S. sell-off overnight. The Hang Seng Index fell 0.9%. Stocks posted a broad decline, as banks and tech stocks suffered substantial losses.

The global forecast for the Asian markets suggests consolidation thanks to ongoing concerns about global economic growth. The European and U.S. markets were sharply lower, and the Asian markets are tipped to open in the red. The lead from Wall Street is broadly negative as stocks moved sharply lower on Wednesday before paring their losses later in the day. Despite the late-day recovery, the Dow and the S&P 500 still ended at a new six-month closing lows.

The US dollar declined sharply yesterday after disappointing data and a shift to risk off trading sent gold to a recent high above $1240. Already on shaky ground after being buffeted by lingering growth concerns over the past few sessions, a string of downbeat economic data including weak retail sales and manufacturing activity numbers dealt Wall Street a fresh blow overnight, sending the S&P 500 down by as much as 4.4%. Safe-haven US Treasuries rallied in response, with the benchmark 10-year yield momentarily slicing below the 2% threshold to a 17-month trough. The dollar fell to a five-week trough against the yen and a three-week low versus the euro as yields slid. The greenback came off lows as Treasury yields partially retraced their decline, although bargain hunters were half-hearted in their bids. The greenback regained a few points at the end of the morning session to trade at 84.95 while the euro is at 1.2829.

Forex traders are now focused on comments from Bank of Japan Governor Kudora. Governor Kuroda is speaking before an upper house committee in Japan’s parliament, making his usual remarks towards the economy, monetary policies and the Japanese Yen.  Japanese Finance Minister Taro Aso said on Thursday that regardless of whether the yen rises or falls, it is better for currency moves to be gradual. Aso, speaking in the upper house financial affairs committee, also said rapid currency moves are undesirable. Aso supported comments made by Kudora. BOJ Governor Haruhiko Kuroda says he’ll go on expanding the money supply just as the Fed begins to pull back on stimulus measures. The Japanese Yen is trading at 106.05 well off its recent high at the $110 level.  The Aussie dollar remains weak at 0.8792 while the kiwi gained a bit this morning after a climb in dairy prices. The NZD is at 0.7985.