Market Movers of the Day
Europe
*Euro-zone Purchasing Manager Index Composite for August surprised for the better rising to 50.4
*Euro-zone Retail Sales dropped 0.2% in July
*ECB left as expected its benchmark interest rate at 1%
*ECB Trichet’s speech
*UK Purchasing Manager Index Services better than expected at 54.1
Americas
*US Initial Jobless Claims worse than expected at 570K
*US Continuing Jobless Claims rose to 6.23 million
*US ISM Non-manufacturing Business rose more than forecasted to 48.4
The Overall Sentiment
US stock markets gained momentum as Chinese shares advanced the most in six months but the positive sentiment softened as US Initial Jobless Claims figure rose more than market expectations. US ISM Non-manufacturing Business climbed more than predicted adding to signs the economy is starting to recover but the data showing rising unemployment pushed markets down erasing some of the earlier gains. The S&P ended up 0.9% after losing four days in a row and the Dow climbed 0.7%. The European Central Bank left its benchmark interest rate at 1% and the Euro fell as Trichet stated in his speech that the ECB is not considering exiting its stimulus policies in the near future. Europe’s Purchasing Manager Index Composite climbed in August indicating that the Euro-zone is emerging from recession but declining Retail Sales figures dimmed optimism suggesting a slow-paced recovery. The Pound rose as UK’s Purchasing Manager Index of services industries climbed more than market forecasted. The Canadian dollar remained at low levels against its US peer as Oil was little changed and markets are awaiting the unemployment figures. Gold continued to rally toward the $1000 mark trading above $995 reaching its highest level in seven months. Silver advanced as well trading above $16.
The Day Ahead
The day will start with Switzerland’s Consumer Price Index providing a measure of the country’s inflation. In Canada the Unemployment Rate is expected to reach its highest level in more than ten years rising to 8.8% from a previous reading of 8.6%. The main attraction for the day will be the stream of data coming from the US at 12:30 GMT. Nonfarm Payrolls is known to provoke high volatility on its release and is expected to show its smallest drop in a year at -223K. A larger decline could bring risk aversion into play pushing the Dollar higher and a smallest one could spur risk appetite driving high-yielding currencies up and weakening the Dollar. The Unemployment Rate is expected to rise to 9.5% from 9.4% a month before. The Average Hourly Earnings and Average Weekly Hours reports will indicate the current state of the labor markets and labor cost inflation. The last figure for the day will be Canada’s Ivey PMI which will indicate the current readiness of organizations to spend money and their confidence in the direction of the Canadian economy.
Technical Analysis
EUR/GBP DAILY
EUR/GBP moved in range from June to August creating a channel between 0.8450 and 0.8700. The cross managed to break above the upper boundary of the channel consolidating around 0.88. It corrected in the last sessions toward the 0.87 level which could act this time as a support for EUR/GBP to regain the bullish momentum.
EUR/CHF DAILY
After trading in a bearish trend since mid-June, EUR/CHF found support slightly above 1.51 and developed an uphill trend. Reaching the critical resistance area just over 1.5350 corrected all the way down to the 1.51 support line once again. The cross presents a good opportunity to enter a Long position with a close Stop-Loss and the flexibility to go Short if the support line is broken.
Market Analysis provided by eToro
Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.
