The Eurodollar continued to move upwards last week going above parity as the dollar retreated against a basket of other currencies. The dollar is falling on hopes that the Fed is going to reduce the pace of interest rate hikes in December, saving US the economy from a deeper recession.
The British pound pushed higher hitting seven week highs as the new UK Prime Minister’s government appeared to gain the confidence of the markets. Worse than expected UK data suggested that UK inflation may have peaked, supporting Sterling.
The USD/Yen declined over the week but experienced extreme volatility after the Japanese central bank again intervened to support a declining yen.
Gold prices climbed throughout most of the week on a softer dollar and hopes that rate hikes might be moderated. But gains evaporated by the end of business on Friday after the dollar began to climb.
Indexes jumped higher on improved sentiment in the markets. The earnings season saw beats for Apple and misses for Facebook. Late in the week energy companies Exxon and Chevron boosted stocks, posting much better than expected results.
Oil prices climbed on a weaker greenback. Oil is also being supported by hopes that OPEC may decide on another production cut at its meeting next month and that an agreement could be reached soon on a price cap for Russian oil.