Market Movers of the Day
Asia
Australia’s Westpac Consumer Sentiment came out worse than expected at -2.5%
New Zealands IBD/TIPP Economic Optimism fell to 47.90
Europe
Germany’s CPI figure came out as expected at 0.1%
France and Italy’s industrial production fell by -1.5 and -5.3%, respectively
Englands DCLG House Price Index showed minor improvement and came out at -4.1%
Americas
ABC/Wahsington Post Consumer Confidence came out worse than expected at -46.00
Equities
It was a quiet day on Wall Street yesterday as the major indices bounced back and forth across their opening market. Even though the indices received a boost at the start of the session, backed by Monday’s extreme intraday rally, they quickly lost their steam going forward. Furthermore, minor strength from the Dollar yesterday, sent stocks back to their starting mark as investors remained cautious going forward.
From a technical point of view, one must note that even though the Dow Jones has now broken its prior high, the S&P500 and Nasdaq are still trading around their previous peaks. The Dow finished the session with a gain of 0.2%, while the S&P closed in negative territory, with a loss of 0.14%.
According to the monthly blue chip survey, economists are still optimistic and reckon that the U.S economy is now on a healthy path back to economic growth. According to the survey the economic growth should increase by 2.7%, but unemployment will drag along and decrease at a very slow rate. Approximately 52% of the economists speculated that unemployment will decrease to 7%, only in 2013.
Financials lagged for most of the session, but failed to present a major drop due to AIG. According to Bloomberg, Moody’s said that the insurer will be able to repay most, or all of Treasury’s investment, if the financial markets continue to show stability.
The lagging sector of the day was the Industrial sector, finishing with a loss of -0.58%
Forex
On the Forex market, the Dollar index presented relative gains and closed the session just under the 75 mark. Even though most of the currency pairs finished the day with a minor change, the intraday session was a volatile one.
The GBP/USD dropped after forming a breakout on Monday, but regained its strength throughout the second half of the day. The dramatic move came after an official from Fitch Ratings stated that the U.K could be the first major economy to lose its AAA status. Even though recent economic data in England are showing a slight improvement, recent actions by the BOE shows that the U.K is still in dire straits. One must note that at the BOE’s last rate decision, officials decided to pump further Pounds into the system to further help the economy. If the labor conditions in the U.K don’t start to improve along with healthy economic growth, the Pound could lose its appealing status as a “risk appetite” currency.
From a technical point of view, the GBP/USD is now trading above its recent break out of $1.6667. Even though this pair is showing minor weakness, a move higher could send this pair to its prior false- break high of $1.7.
EUR/USD and the AUD/USD both held on to relative strength as the day progressed. The AUD/USD caught most investor’s attention as the pair finished the session around $0.9327. Similar to the equity market the AUD/USD is trading around its prior high. When taking a glance the chart below one can see that this pair is trading around a critical level, especially as a drop could turn this pattern into a double top scenario. A break above current levels will confirm the continuation of the trend. One must note that the RSI is currently showing negative divergence.
Ahead
Similar to yesterday’s trading day, the U.S won’t be releasing any major market moving data. During morning hours, most of the data will come from England, releasing their unemployment rate and BOE inflation report, among others. During U.S hours New Zealand and Australia will both be releasing results including unemployment figures and Retail Sales. All unemployment numbers are expected to rise with the U.K expected to release an 8% figure and Australia expected to come out with a number of 5.8%.
Daily Forex 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.
