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Euro, Dollar Strengthen


The dollar drew support from a boost in manufacturing and strong housing gains to spike consumer confidence. Meanwhile, the euro posted surprisingly improved manufacturing as Germany recovered nicely from recent fluctuations. While earnings from giants Caterpillar and AT&T disappointed, US equities only suffered minor losses after reaching historic intraday highs on Tuesday. Gold suffered its first setback in four days.

Equities in Europe sustained reasonable gains on Wednesday. Manufacturing across the 17-nation euro zone indicated that the region’s 17-month recession shows sign of easing.

The news was welcome relief for a market that has become increasingly fixated on unenthusiastic economic data from China and the volatile performance of Japan’s stock market. Chinese manufacturing contracted for the third consecutive month in July and plateaued to an 11-month low.

The US housing report showed existing home sales climbed to a 5-year high in June. Sales spiked despite an increase in lending rates. Conversation in Washington indicated that lending standards might ease for first-time homebuyers, a necessary commodity for a full housing recovery.

US Equities

The Dow closed off 25.50 points settling at 15,542.24 down 0.016 percent. The S&P 500 Index dropped 6.45 points, off 0.38 percent to 1.685.94. The Nasdaq Composite Index closed at 3,579.60 down 0.33 points.

Caterpillar lost 2.4 percent to $83.44 after disappointing quarterly returns and a downward projection for the rest of the year. AT&T lost 1.1 percent to $35.40 as mobile service sales failed to meet projections.

In after-hours news, Facebook reported stronger than expected revenues lifting the stock 15 percent to $26.51.

European Equities

Europe’s FTSEEuroFirst 300 Index held on for a 0.6 percent gain, closing at 1,214.63. Technology had pushed the market higher earlier in the day. Apple’s 6 percent gain to $443.86 put the stvck at its highest level since June 10, 2013.

The MSCI world equity index fell o,25 percent to 375.09. The market suffered from the weak Asian data.

Currency

US Treasury yields rose on the strength of the new data and sentiment that the Fed will begin to taper its stimulus. The yield on the benchmark 10-year note jumped 2.581 percent but a Wednesday sale of 5-year notes met with weak demand.

The dollar index gained 0.4 percent to 82.272 on strong momentum just before the close. The gains ended three days of losses.

The euro dipped from a one-month high of $1.3256 to 0.2 percent lower. The euro closed at $1.3198. Volume on the euro/dollar pair reached $4.6 billion in heavy trading.

German and French consumer sentiment polls surpassed expectations creating heavy trading of low positions. The French and German PMI was in sharp contrast to sentiment in China.

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