Possibility of FED Reducing QA Spreads Uncertainty in Equity Markets, USD Depreciates - 30.5.2013

Following positive leading economic indicators for US economy on Tuesday, there was increased speculation that the FED will withdraw somewhat from asset purchases and as a virtue of that risk appetite reduced. Thus the pressure on US equities increased inducing them to move into a correction phase, the S&P 500 dropped for second consecutive day and closed at 1648.36, the Dow Jones declined by 0.69% and NASDAQ lost 21.37 points. The US dollar index found cap at 84.33 yesterday with bias reversing in the intraday to end early this morning at 83.28. Later today, preliminary US GDP will be released for the first quarter and should it be higher than expected, chances for FED tapering asset purchases would accumulate.

Furthermore, the Asia equities have been under heavy pressure amid possible reduction of the US monetary stimulus program, with NIKKEI 225 losing up to 5.15% or 737.43 points to close at 13589.03, one week earlier it peaked at 15627. In addition, Hang Seng lost by 0.63%, Shanghai composite is slightly negative and the S&P/ASX 100 is lower by 0.91%. The common currency against the greenback benefited by that uncertainty on FED QA, advancing from downside hurdle at 1.2841 back around resistance at 1.30, more specifically rose as high as 1.2983. Lastly, the Aussie against the US dollar recovered from more than a year low at 0.9527 to resistance at 0.9693.