Market Movers of the Day
Asia-Pacific
Japanese all industry index surprised for the better rising 0.9% MoM
Europe
Switzerland Trade Balance was better than expected rising to 1.92B
EU Current account strongly disappointed falling to -€1.3B
UK Retail Sales at 0% growth MoM
Americas
Initial Jobless Claims at 531K worse than expected
US Housing Price Index falls -0.3% MoM
US Leading Economic indicator rise 1% MoM
Canadian Retail Sales rise 0.8% MoM better than expected
The Overall Sentiment
Forex
In Switzerland trade balance surprised substantially for the better rising to 1.92B versus analysts’ expectations of a drop to 1.56B busting speculations the CHF is heading for parity with the Dollar and even higher. The CHF peaked at 1.003 against the Dollar before retreating lower. On the Contrary European current account strongly disappointed with a deficit of -€1.3B versus an expected €2B surplus expected by analysts’ surveys. Bullish sentiment for the Euro however remained rather unaffected amid a broad Dollar weakness with the Euro peaking around 1.5062$.In the UK Retail Sales remained flat MoM confirming fears UK consumers are still under pressure and remain reluctant to spend. In the US Initial Jobless claims disappointed with 531K jobless claims around 15K more than anticipated, Housing price index fell -0.3 and the US leading indicators was slightly higher than expectations .At the day’s end the Greenback regained some of it losses against the Euro closing around 1.5 and moving to the higher end of the 91 against the Japanese Yen. Sterling remained flat and continued to hover under the 1.67$.
Commodities
Sentiment for Metals was slightly negative as a stronger Dollar towards the end of the Day triggered profit taking with Gold tapping the 1050$ zone and Silver rather steady within the 17$ range. Sentiment for petroleum was not too late to follow with some profit taking on oil pushing it towards the 80$ support and Natural Gas steady at 5$.
Equities
In Europe Sentiment was rather negative as profit taking pushed all major indexes south. In Germany and France benchmark indexes moved into the red as concerns stock prices have outpaced earnings results loomed. The GDP figure coming from China pointing China has reached its target growth for the quarter also produced some headwind for the European markets as this could lead China to unwind stimulus and thus tame demand for European exports. In the UK sentiment was largely effected by profit taking in oil futures which pushed UK petroleum stocks down weighing on the FTSE 100.At the Day’s end the DAX was lower by-1.21% ,the CAC40 was down -1.35% and the FTSE retreated by -0.96%. However in the US sentiment was broadly positive as earning largely topped analysts’ expectations. Amazon, UPS and AT&T posted strong earnings and McDonalds the fast food giant posted strong results and provided a strong outlook on the future of the business. The Dow ended higher by 1.33% and S&P gained 1.06%.
The Day Ahead
Economic data for the Day will be at the centre. Opening with the highly regarded IFO business climate in Germany the largest economy in Europe and later in 8:30 GMT the UK GDP is due with investors’ surveys pointing a consensus 0.2% growth QoQ, amid hopes the BoE aggressive measures and the weaker Pound has helped moving the Economy back to growth and out of recession. A surprise for each direction is expected to create strong swings for the Sterling with any disappointment making the Sterling look overvalued. In the US the Fed Chairman Ben Bernanke is expected to speak with investors expecting some outlook on the economy after the rather anemic Beige book review. The concluding data for the Day will be the US existing home sales with investors anticipating a 5% gain over August. A positive surprise has the potential to magnify the bullish sentiment which is already present among investors. Although Economic data is expected to stir the wheel Microsoft’s earning should also be watch as the company results could largely affect sentiment for equities.
Technical Analysis
GBP/USD
After rallying rather strongly from the 1.59 area to the 1.66 the pair has finally reached its critical point. The 1.67-1.68 resistance is rather critical as it triggered the bearish selloff which pushed the pair to as low as 1.59 to begin with. A break of this resistance would point the pair is aiming the 1.7 mark and even beyond, continuing the bullish cycle. A failure for a break however could push the pair to test the 1.59 support and perhaps switch the major trend to bearish.
Market Analysis provided by eToro
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