U.S. equity markets finished higher on Thursday in a follow-through rally following yesterday’s bullish crude oil report.  It was difficult to tell today what the driving force was behind the rally since crude oil finished lower and the currency markets were lifeless.

Friendly comments from Fed Chairman Bernanke regarding the economy helped send equity prices soaring on Friday.  Speaking to a group of bankers and financial industry officials, Bernanke said that the global economy was emerging from recession.  This comments sent a wave of optimism through the equity markets which drove the stock index futures to their highest levels for the year.  In addition to the Bernanke comments, news that U.S. existing home sales rose contributed to the rally.

Forex Traders Looking for Direction

Following Fed Chairman Bernanke’s bullish comments which sent higher risk assets higher and the Dollar lower on Friday, the Forex markets appear to be looking for direction overnight.

Dollar to Rise if U.S. Leads World Out of Recession

Now that U.S. Federal Reserve Chairman Bernanke has declared the global economy is beginning to emerge from its worst crisis in generations, the emphasis will be on whether central banks continue to work together to prevent a crisis like this from happening again or if each will take it own path to assure the path to recovery is smooth.

Bernanke Reappointment Non-Event; Traders to Focus on Consumer Confidence

Dollar Mixed as Traders Wait for Economic Data

A big improvement in the S&P/Case-Shiller Housing Report helped support the U. S. equity markets early in the trading session but it was the better than expected U. S. Consumer Confidence Report that helped launch the stock markets to new highs for the year.

After the initial thrust to the upside which took out yesterday’s high and negated the technical reversal top, the equity markets broke hard to the downside, but buyers quickly stepped in. Since the early morning action, the markets have been churning in a tight range.

Dollar Expected to Open Mixed

The U.S. Dollar is expected to open mixed this morning based on a slow overnight trade.  The Dollar is losing ground to the Euro and Japanese Yen while showing strength versus the British Pound, Canadian Dollar and Swiss Franc.

U. S. equity markets traded mostly sideways following a favorable U. S. Durable Goods Report and an improved U. S. New Home Sales Report. After an early session thrust to the upside failed to take out yesterday’s highs, the major stock indices sold off and settled into a range.

September Treasury Bonds firmed into the close as the Treasury completed another well-received auction. Foreign central banks were rumored to be the large supporters of the auction. Sideways equity markets helped contribute to the support.

U.S. GDP Report Likely to Move Forex Markets

Today’s U.S. Second Quarter GDP Report should move the markets today.  Most economists are calling for a contraction of 1.5%.   A report showing a deeper contraction than the estimate could pressure stocks. 

Japanese Yen Could Gain as China Ponders New Economic Controls

The September Japanese Yen cleared an important technical hurdle overnight and is now in a position to challenge the July top at 1.0909.

Higher Energy and Equity Markets Drive Dollar Lower

The U.S. Dollar is trading lower against most major currencies overnight.  This weakness is a continuation of yesterday’s action which saw the Dollar settle lower after a late session surge in U.S. equity markets and crude oil.

Demand for Higher Risk Assets Drives Equities and Energy Higher

Traders are looking for a higher opening in U.S. equity markets this morning based on a follow-through rally overnight.  Yesterday, equity markets fell sharply lower but were quickly bought up when crude oil reversed its intra-day trend and started to rally.  This move ignited renewed interest in higher risk assets.