USD Climbed To A 3 Month High Against JPY

The US dollar climbed to a three-month high against the yen on speculation the Federal Reserve is moving closer to withdrawing stimulus measures as the economy recovers, pushing bond yields higher.

Despite a brief dip to 91.90 in Asia, the pair quickly picked up what it left off on Tuesday and price rallied to intra-day high of 92.77 in NY afternoon before retreating in line with dollar's broad-based softness.

The US Equities Ended Flat

The Dow still stayed above 10500. Ideally a break above 10500 should have been very bullish.

But the fact that the break was accompanied with very thin volumes owing to holiday season has not made the Dow very bullish until now. Going forward into the new year, we shall have to see whether this rise above 10500 turns out to be a false or a potent break.

The Asian indices are trading mixed. The Nikkei (10546.44) is closed today and shall reopen only on Monday. The Shanghai (3262.08) and Straits (2884.16) is trading flat while the Hang Seng (21669.42) and All Ordinaries (4879.90) is trading 0.82% and 0.66% higher respectively. The Sensex (17343.82) ended 0.33% lower yesterday and is likely to be ranged today as well.

Today is the last trading day for 2009. Most markets have risen between 60%-120% since March '09 lows this year. Let's see how 2010 unfolds and if this year brings accelerated economic recovery to the developed economies in particular and the World in general. We hope that Sensex regains 20000 in 2010.

EUR Staged a Rebound In Europe

Euro staged a rebound in Europe on short-covering after Tuesday's selloff and price hit an intra-day high of 1.4361 before easing.

However, with the Chicago PMI report revealing overall strength in U.S. economy and rise in production (new orders and employment were particularly encouraging), the single currency dropped briefly to a low of 1.4273 in NY morning before staging a rebound in NY afternoon.

In other news, Euro zone M3 money supply growth showed a surprise fall in Nov while loans to the private sector fell at a less pronounced rate than had been expected.

Cable extended Wednesday's selloff and fell to a 11-week low of 1.5832 in European mid-day due to ongoing worries over the U.K. economy and rising public debt.

The decline was also in part due to thin market condition. However, the British pound staged a strong rebound in NY session triggered by active cross-buying in sterling.

Eur/gbp posted its biggest decline in more than two months, falling from 0.9055 to as low as 0.8911 and cable reached an intra-day high of 1.6095 in NY afternoon before stabilizing.