{"id":4830,"date":"2009-11-16T07:29:24","date_gmt":"2009-11-16T12:29:24","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=4830"},"modified":"2009-11-16T07:29:24","modified_gmt":"2009-11-16T12:29:24","slug":"forex-weekly-market-review-nov-16-09","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/11\/16\/forex-weekly-market-review-nov-16-09\/","title":{"rendered":"Forex Weekly Market Review Nov 16, 09"},"content":{"rendered":"
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The equity markets headed northbound, making new highs for 2009 last week, as solid earnings and encouraging economic news pushed investors back into riskier assets.\u00a0 The large cap S&P 500 closed the week up 24 points or 2.25%. The S&P 500 Index created a new high for 2009, hitting 1,105 and the DJIA kept its pace, reaching 10,342 points. Equities moves were mainly affected by the currency market last week as large cap multinational stocks that are often affected by Forex fluctuations, led the way higher.<\/p>\n

The markets started off on a solid note on Monday, after the G20 showed minimal concern with regards to the weakness in the US dollar.\u00a0 US equity markets surged, with DJIA and S&P up 2.0% and 2.2%, respectively.\u00a0 Financials and industrials outperformed which lead the markets higher. The main message from the weekend G-20 meeting was that governments would maintain and back strong stimulus efforts to those economies which are now moving in the right direction to deal with the current recession.<\/p>\n

On Wednesday there was a plethora of economic data out of Asia which stimulated confidence that global growth was on the mend.\u00a0 The impressive retail sales figure (up 16.2% y\/y vs. 15.7% expectations and 15.5% in Sept) and industrial production (which accelerated from a 13.9% y\/y pace in Sept to 16.1% in Oct vs. 15.5% expectations) helped bolster hopes China will help the global economy to gain further traction.\u00a0 This, combined with the better than expected Japanese machine orders which grew more than twice as fast as expected in Sept, reinforced faith in the recovery. Orders were up 10.5% m\/m, much more than the 4.1% expected.<\/p>\n

The Equity markets continued to hold onto gains for the week as market participants awaited the Jobless Claims number out of the US, which was scheduled on Thursday.\u00a0 The U.S. Labor Department said in its weekly report that initial claims for jobless benefits fell by 12,000 to 502,000 in the week ended Nov. 7. That was the lowest level since Jan. 3. The previous week\u2019s level was revised to 514,000 from 512,000.\u00a0 Although analysts were expecting a drop to 510,000, optimists were hoping for a fall below 500,000.\u00a0 The result disappointed and resulted in some profit taking, which caused the equity indices to drop and the dollar to rise.<\/p>\n

On Friday, the EMU released its GDP which came out slightly worse than expected.\u00a0\u00a0 Euro-zone gross domestic product grew 0.4% in the third quarter, after dipping 0.2% in the second. This was the first quarterly expansion since the first quarter of 2008. On an annualized basis, the contraction in GDP eased to 4.1% from 4.8% in the second quarter. Economists were expecting the first estimate of third-quarter GDP to show that the economy had expanded 0.6% on a quarterly basis and contracted 3.9% on an annual basis.<\/p>\n

Forex:<\/strong><\/p>\n

Even though the Dollar showed relative strength last week, it failed to present any major moves, appearing to be running out of steam.\u00a0 The euro lost ground after failing to sustain gains above $1.5000 and dropped towards the end of the trading week. Even though traders preferred to cash in on recent gains, the currency managed to stay above the $1.4875\/85 area (around the 20-day moving average and 38.2% retracement of the recent rally).\u00a0 The Euro zone industrial production data was somewhat disappointing, and increased by only 0.3% m\/m in Sept (0.5% exp). On the upside, economic data also showed that Germany\u2019s output jumped 3% in Sept and contributing to the slightly smaller than expected contraction in Germany\u2019s GDP result for the third quarter.\u00a0 Spain\u2019s GDP also showed a better than expected result at -4.0% y\/y vs. -4.1%. From a technical point of view, the Euro is now in danger of forming a double top, struggling advance above $1.50.\u00a0 One must note that break below 1.48 could create a downdraft for the EUR\/USD and lead to additional selling pressure.<\/p>\n

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The Australian dollar hit new highs for the year touching 93 cents against the US dollar.\u00a0 Australian home approvals climbed by the most in six months in September, giving the RBA justification to hike rates in coming months. Though the central bank has pointedly used the word \u2018gradual\u2019 to describe the movement of interest rates in coming months, improving data continues to underpin speculation of sharper tightening.\u00a0 The AUD\/USD finished the week just under multi-year highs.<\/p>\n

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The pound came under pressure after the BoE\u2019s King, commented after the release of the Quarterly Inflation report. The bank Governor talked about the benefits to the economy of a weaker pound and mentioned that it could help economic growth.\u00a0 He also said he has an \u201copen mind\u201d on bond purchases, suggesting the BoE has not necessarily reached the end of Q\/E.\u00a0 The BoE said inflation is still expected to come in below the 2% target for most of the next 3 years before edging higher.\u00a0 The Dovish comments had a negative impact on the sterling sending the cable down after posting hefty gains. Even though, fundamental data is pointing to further weakness, technical levels could hold strong, especially as the Sterling is now trading around prior resistance.<\/p>\n

The week Ahead <\/strong><\/p>\n

Next week, a wave of data is going to be released, some of which will have a major effect on the intraday sessions.\u00a0 On Monday the week will start off with US Retail sales and Business Inventories.\u00a0 On Tuesday the market will need to absorb UK CPI and US PPI, Industrial Production and Capacity Utilization. During the week Australian Wage Price Index will be released, followed by UK BOE minutes and the closely watched US CPI figure. The number will be scrutinized by investors to make sure that inflation isn\u2019t showing signs that could hurt economic growth. On Friday the BOJ will announce their interest rate decision. The bank is expected to hold at current levels of 0.1%.<\/p>\n

Daily Forex Market Analysis provided by eToro<\/span><\/a><\/strong><\/p>\n

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\u2019t trade with money you can\u2019t afford to lose.<\/p>\n

\u00a9 2009 eToro Blog.<\/a><\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By eToro – Even though the Dollar showed relative strength last week, it failed to present any major moves, appearing to be running out of steam. The euro…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-4830","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/4830","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=4830"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/4830\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=4830"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=4830"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=4830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}