Market Movers of the Day
Asia-Pacific
*Australian Retail Sales surprised for the worst at -0.2% vs. 0.5% expected
*New Zealand Unemployment Rate rose more than forecasted to 6.5%
Europe
*UK Nationwide Consumer Confidence at 72 as expected
*German PMI Services worse than expected at 50.7
*UK PMI Services better than forecasted at 56.9
*EU PMI Services slightly above estimates at 52.6
*EU PPI in line with expectations at -0.40%
Americas
*US ADP Employment Change worse than expected at -203K
*US EIA Crude Oil Stocks surprisingly fell 4.0M
*US ISM Non-Manufacturing PMI weaker than predicted at 50.6
*US Fed left benchmark Interest Rate unchanged at 0.25%
The Overall Sentiment
Equities
US stock markets closed on the positive side but far from their intraday highs. Equities rallied as the Federal Reserve left its benchmark interest rate unchanged at 0.25% and stated once again that it will keep interest rates ‘exceptionally low for an extended period’. Fed officials added that this policy will remain in place as long as ‘inflation expectations are stable’. A downward rally at late trading hours led by a drop from financial shares corrected earlier gains. Still, the S&P managed to close up 0.1% and the Dow added 0.3%. European stock markets advanced driven by better-than-expected companies’ earnings reports sending all main indices to the green side. The DAX gained 1.7%, the FTSE 100 added 1.4% and the CAC 40 rose 2.4%. Canadian stocks advanced as Gold continued to rally and Oil climbed above $80.
Forex
The Dollar weakened all across the board rising only against the Yen as the Fed kept interest rates unchanged and stock markets rallied. EUR/USD advanced strongly reaching an intraday high slightly above 1.49 to finally settle in the 1.4870 area. The Pound strengthened against both the Dollar and the Euro supported by positive data coming from UK’s service sector. GBP/USD retreated to the 1.6550 area after failing to break above 1.66. Commodity-linked currencies advanced as Gold continues to break records and Crude Oil rose above $80. The Aussie dollar managed to climb in spite of some early losses on surprisingly negative Retail Sales figures. The New Zealand dollar gave up most gains as the Unemployment Rate reached its highest level in over nine years. The Yen lost versus most of its counterparts declining against the Dollar for a third day. USD/JPY peaked at 91.30 and corrected to close the day around the 90.50 vicinity.
Commodities
Gold continued to rally setting new record highs at $1097 firmly stating its intentions to break the $1100 mark. Silver advanced for a fourth day climbing above $17.50. Crude Oil rose beyond $80 after the weekly EIA report showed stockpiles unexpectedly dropped 4.0 million barrels.
See more info about the Gold rally
The Day Ahead
Market’s attention will be on Europe as both the European Central Bank and the Bank of England will announce their interest rate decision. The ECB is likely to keep its benchmark interest rate at a record low 1% in its statement scheduled at 12:45 GMT. The bank’s president Trichet will speak at a press conference shortly after and analysts believe that there will be an indication about the ECB’s intention to start approaching the withdrawal of stimulus policy. In addition to the rate decision the Euro-zone will release its Retail Sales report. According to forecasts the BoE will probably leave its key rate at 0.5% and possibly expand its quantitative easing program by an additional £50 billion, thus signaling that the UK economy is still lagging behind when several other countries already started studying exit strategies. To complete an agitated day the UK will release its Industrial and Manufacturing Production figures. In the US session the Initial Jobless Claims report is expected to show a reduction of 10k from a previous reading of 530K in the number of workers applying for unemployment insurance for the first time . Canada’s Ivey PMI is forecasted to fall to 58 from a prior 61.7 in the last significant economic data release of a very appealing day for trading.
Technical Analysis
USD/CAD DAILY
USD/CAD has been moving downwards in several bearish cycles defining a clear trend line that acted as a resistance for every bullish move. The pair presents the opportunity to open a Short position considering that it is currently trading near that trend line and the bullish momentum seems to be running out of steam. Stop Loss should be placed above the resistance and taking into account that the last sessions showed some volatility another attempt to break above it is not out of the question.
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.
