Market Movers of the Day
Asia-Pacific
Australian HIA New Home Sales rise 11.4% MoM
Japanese All industry Activity index rise 0.5% less than expected
Europe
German IFO Business Climate at 91.3 versus 92.1 expected
German IFO expectations at 95.7 higher than expected
Americas
US Initial Jobless claims at 530K better than the 546K expected
US continuing Jobless claims at 6138K
US Existing Home Sales fall -2.7% MoM the first time since March
G-20 Talks
The Overall Sentiment
Sentiment was strongly negative with investors worries over a recovery in the US and worldwide pulling stocks into red territory. In the Tokyo session Japanese all industry activity index disappointed with a 0.5% rise. However it was risk aversion and profit taking that set the tone with equities coming under strong selling pressure and the Yen on the gaining strength against its’ peers. In the London session equities continued to move south with German IFO business climate surprising for the worst with a reading 91.3 and in strong reaction to fears economic growth will surprise for the down side. In the FX arena it was the sterling which drew most attention with comment from BoE governor Marvin King outlining he is comfortable with a weaker pound as it is positive for the countries’ exports. FX players punished the sterling in response to the news with a strong selloff pushing the currency to as low as 1.6$ against the dollar and closer to 0.92 against the Euro. As the New York session was opened investors attention shifted to initial jobless claims and Existing home sales. While initial Jobless claims surprised slightly for the better it was the Existing Homs sales figure which disappointed, falling the first time since March with a fall of -2.7% MoM. The combination of the Fed’s statement a day before that it will gradually reduce purchases of mortgage debt and the weak home sales squeezed stock prices and push US equities to a negative close with S&P falling -0.95% and the Dow lower by -0.42%.The Dollar after several negative sessions edged higher for the second day trading close to 1.46 against the Euro and close to 1.1 versus the Canadian Lonnie in a typical risk aversion play. Commodities moved to cheaper levels in tandem to a stronger dollar with Gold under 1000$ settling around 990$ and Oil trading under 65$.
The Day Ahead
In the Tokyo session sentiment could be affected by the publication of the BoJ minuets, stating the central bank is content with the credit status of Japanese corporations while tight credit conditions for small businesses which posse a substantial portion of the country’s economy remain a concern .Negative sentiment coming from the US data published a day before might also weigh on sentiment with investors potentially moving to safe haven securities. In the London session concerns over US growth is also expected to weigh with investors eyes carried once against on data coming from the US. Moving to the New York session which is again at the spotlight with the highly important durable goods data, Consumer sentiment and new home sales which will shed more light on consumption and will paint more of a complete picture of US real estate with the new home sales coming a day after the negative existing home sales which loomed a day before. Overall sentiment will be exceptionally sensitive to the data coming from the US with stocks possibly advancing prior to the data rebounding from the sharp selloff that hammered equities.
Technical Analysis
GBP/USD
After trading in a long sideways trend in the range of 1.6-1.7 the pair it seems has broken the 1.6 mark. Although the stochastic indicators suggest the pair is a bit on the oversold side which could cause for a slight rebound, unless the pair will settle above the 1.65 level the pair will still be in a down trend moving towards the next significant support the 1.58 level. A rise of above the 1.65 would move the pair again to a sideways trend and might postpone the bearish momentum but would not entirely exclude another attempt to break downwards. A break of the 1.58 level downwards could spark strong selling momentum.
Market Analysis provided by eToro
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