By eToro
Market Movers of the Day
Asia-Pacific
Australian Employment change at -27.1k worse than expected
Japanese GDP for Q2 at 2.3% annualized which is significantly worse than expected
Europe
In the UK BOE key rate left unchanged at 0.5% and QE program at £175Bn
Americas
Canadian key rate left unchanged at 0.25%
US Trade deficit at –32B worse than expectations
Initial Jobless claims at 550k in line with expectations
The Overall Sentiment
In Asia-Pacific Australian employment figures slightly disappointed and in Japan the Nikkei rose above 2% ahead of the expected GDP figures. In the London session the BOE rate decision was at the centre with the rate left unchanged at 0.5% as expected. In addition the comments from the BOE stating the UK economy is on its way to stabilize and that there is no need to expand the £175Bn quantitative easing program spurred more bets on a stronger sterling which traded around 0.875€ and close to 1.67$ .In Canada rate was also left unchanged at 0.25% and in the US sentiment was rather positive as investors felt more comfortable buying stocks in response to the speech by president Obama over healthcare issues lifting equities in the US higher and the Dollar lower. Although the equities buyout could be perceived as a reaction to dollar weakness rather then positive sentiment the combination of initial jobless claims which was in line with expectations at 550k and the sharp drop in the VIX of -3.17 pointed the market was rather optimistic then risk averse. At the Day’s end the euro consolidated with the 1.46$ and the Dollar Yen fell under the 92 level amid concerns over the Japanese economy. In the commodities arena Gold fell below 1,000$ as market volatility pulled back and Oil traded above 72$ barrel. Equities in the US led the positive sentiment with 5 consecutive sessions on the green, the DOW was up 0.84% and the S&P advanced 1.04%.The closing event for the day which accrued after most market were closed was testimony of US treasury secretary Timothy Geithner which outlined the government is willing to step out of its holdings in the banking system but when the timing is right. Geithner also expressed his optimistic view on the economy stating the economy is reconvening but also stated the recovery process will be painful.
The Day Ahead
Sentiment Asia pacific will largely be affected from the disappointing Japanese GDP figure published at the end of the Day before with the GDP rising 2.3% annualized in Q2 against expectations of 3.7% from the preliminary assessments by the Japanese government. However the sentiment in the region outside Japan could also be positively affected from the strong economic data coming from China which is the largest imports consumer in the region. In the London session sentiment will be affected from the statements of the BOE a day before and the PPI which will reflect more on health of the UK economy. In the US sentiment will mostly be affected from the testimony of the treasury secretary a day before which occurred after the markets were closed but most importantly from the looming threat of the sinking greenback. Overall sentiment is expected to be slightly on the positive side although 5 consecutive gains in Wall Street could spark some profit taking.
Technical Analysis
USD/JPY
Since January the pair has failed to trade under the 91 strong support. However latest developments show the pair is trading under the 91.5 and aiming the 90 area. A break of the 91 area would mark the 88-89 support as the next target for this long lasting bearish trend which started at the 100-101 peak. If the pair will eventually fail to close under the 91 a rebound above the 93 area might at least signal a pause in the trend.
Market Analysis provided by eToro
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