Prior to Wednesday this week, there were discussions and a possibility that QE3 was on the table. Traders took the news and sent US dollar much lower while commodity currencies, Crude Oil and Gold went much higher. Gold traded at a high of US$ 1,594 thereabouts.
However, on Thursday the Fed Chairman said to the Senate Banking committee that inflation is much higher, the situation is more complex and are still uncertain about the near term developments in the US economy. Before any further discussion of new stimulus, the Feds would like to see if the US economy picks up or not. As such, the Feds are not prepared to take further action at this point.
He added that the US default debt would be devastating for both the US and global economy.
As a result, the US major indices closed lower for the day with the NASDAQ falling 1.22% lower. Spot Gold retreated from the highs and closed around US$ 1,586 for the day.
After US closed, Google announced 2Q earnings that blew past expectations. The 2Q performance was much better than analyst anticipations.
Thoughts for the day. Would Asia market follow through with the Feds or be optimistic with Google earnings? Would Europe still be focus on sovereign debts? The closure for US debts is round the corner. Would an agreement be reached by next week such that the funds would be available by Aug 2nd?
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