US market will rise tonight

Markets set to rise tonight to possibly 200 plus rise following strength in the dollar.


07/23 05:56
Dollar Surges Against Euro and Yen on Demand for U.S. Stocks
By Chris Gothard


London, July 23 (Bloomberg) -- The dollar had its biggest gain in 10 months against the euro and surged against the yen on signs U.S. stocks will rebound.

One euro bought less than $1 for the first time in a week, slipping to 99.09 U.S. cents, from $1.0090 last night. The dollar rose to 117.71 yen, from 116.28, its biggest gain since March 18.

``Stability in the U.S. stock market goes hand-in-hand with a stronger dollar,'' said Tony Robinson, chief investment officer at Attica Asset Management, which oversees $200 million. He bought dollars for euros last week, anticipating the U.S. currency would recover because its decline has ``gone too far too quickly.''

Futures on the three main U.S. stock indexes rose. Investors are buying equities after the 7 percent tumble in the Standard & Poor's 500 in the past two days and the Nasdaq Composite's 5.5 percent drop. Stocks have plunged on concern companies falsely inflated earnings and signs of slowing economic growth.

On nine of every 10 days in the past three months, the dollar has moved in the same direction as U.S. equities, according to Bloomberg calculations. S&P futures gained 11.2 points to 831 and Nasdaq 100 futures rose 8.5 points to 952.

``There should be a rebound in U.S. equity markets, which is helping the dollar,'' said Hans Redeker, head of currency strategy at BNP Paribas. ``This is just a pause in dollar weakness.''

`Bringing Dollars Home'

The dollar was also boosted by speculation U.S. mutual funds will have to sell overseas assets to meet demands for cash from their investors. Withdrawals from U.S. stock mutual funds are at almost double the record pace from last September, according to TrimTabs.com Investment Research Inc.

``U.S. investors may be selling overseas assets and bringing dollars home to cover redemptions,'' said Shohgo Nagaya, foreign- exchange manager at Nomura Trust and Banking Co. in Tokyo. ``Their returns from the domestic markets are worsening.''

While stocks have declined in many of world's major economies, the dollar has fallen because the U.S has the biggest current-account deficit, which means it must attract the most foreign investment to bolster its currency.

The U.S. trade deficit widened to a record $37.6 billion in May, a report on Friday showed, as imports rose 1.8 percent and exports added 0.7 percent.

Gold

Gold prices had their biggest decline in three weeks as the euro's drop made the metal more expensive for buyers in Europe.

Gold for immediate delivery fell as much as $2.75, or 0.9 percent, to $320.25 an ounce. It reached a 2 1/2-year high of $330.55 last month as a falling dollar and tumbling stock markets spurred investors to seek safer holdings.

Some investors said the dollar's gain came as the slump in U.S. stocks spread to Europe and Japan.

``We are disappointed that European stock markets haven't broken free from the downward movement of U.S. stocks,'' said Tony Spence, who helps manage about $15 billion at First Quadrant Ltd. ``We have been sellers of euros in the past few days.''

Germany's benchmark DAX index yesterday dropped to its lowest level since October 1997. A 1.6 percent gain today pared its year- to-date descent to 27 percent.