Implied volatility soared mid-day today, as the equity markets swooned and the dollar rallied. The US dollar index made a new high for the year and is poised to continue to the upside. The big news of the day came at the as the US equity markets closed, when the US senate approved and confirmed Ben Bernanke for a second term as head of the FOMC, the US central bank.
On the economic front, euro zone January economic confidence rose to its highest level since June 2008 (95.7 vs. 92.3 expected and an upwardly revised 94.1 in December-from 91.3.) Additionally, German unemployment was better than expected (up 6K vs 15K expected). The positive news did not help the Euro during the trading session. Traders were still shell shocked by the huge rise in Greek bonds that occurred on Wednesday. Greek and Portuguese bonds rose 52 and 11 basis points respectively which are huge selloffs in the price of these bonds. Greece’s Finance Minister George Papaconstantinou said he hasn’t held any discussions with other European governments or the International Monetary Fund about a bailout. Greece is facing increasing skepticism from financial markets about its ability to raise the €54 billion ($75.72 billion) that it needs in 2010 to finance its budget deficit for this year and its maturing debts.
In the US, The number of U.S. workers filing new claims for jobless benefits fell last week by a smaller amount than economists expected, according to the Labor Department.
Initial claims for jobless benefits fell by 8,000 to 470,000 in the week ended Jan. 23. The previous week’s level was revised to 478,000 from 482,000. Economists surveyed expected initial claims to decrease by 32,000.
Additionally, orders for long-lasting goods rose 0.3% in December much less than expected following a pair of declines, according to a report signaling manufacturing’s recovery could be slow.