Market Movers of the Day
Europe
UK Jobless claims change at 12.9K better than expected
UK Claimant count rate in line with expectations at 5.1%
UK ILO Unemployment at 7.8% Vs 8% expected
UK Average earnings (excluding bonus) at 1.8%
The Overall Sentiment
A day loaded with UK data ended with the Sterling sharply lower trading under 1.66$ and above 0.90£ against the Euro. Economic indicators were generally in line with expectations and even slightly better with unemployment at 7.8% against an expected 8% and the claimant count rate (counting people seeking work) was 5.1% as expected. The BoE even updated upwards its growth and inflation forecast for the near term. But the comment from Governor Marvin King than he does not rule out QE expansion in the future alongside comments from BoE official that a weak pound is positive for UK exports outlined that not only BoE officials still see downside risk for the economy but that the BoE actually feels comfortable with a weaker Pound. Investors reacted to the news by hammering the currency and pushing it under its weekly lows. Although sentiment for the Sterling was negative the overall risk to haven equation was rather balanced with the Dollar ending the day flat trading around 1.5 to the Euro and rebounding to 89.8¥ from its day lows against the Japanese Yen.
Equities
Sentiment in Wall street was rather positive effected by three major factors the Fed’s statement outlining once again that rates will remain low for some time, better than expected data from China but most importantly better than expected earnings coming from market movers including HP the world largest PC maker, Toll Brothers the real estate company. HP beat forecasts and upgraded its future forecasts and Toll Brothers reported strong results which pushed the share more than 16% higher. At the day’s end the NASDAQ was up by 0.74% and S&P by a modest 0.5%.
Commodities
Sentiment for Gold continued to be strongly bullish with the yellow metal continuing to surge well above the 1100 mark reaching to the 1020$ zone as investors continue to look for a hedge against Dollar weakness, Oil also gained but modestly and traded slightly higher than 79$.
The Day Ahead
Weak inflation figures coming from Japan before the opening of the trade with domestic corporate goods down -6.7% YoY could hamper bets on the Yen with the Japanese deflation problem taping once again. Sentiment for the Aussie could be rather positive as the better than expected unemployment data increased substantially bets the RBA will raise rates once again. In The EU the Industrial production due will shed some light on the effects the strong euro has on the regions industry but the ECB monthly report will gather most attention as market players still try to figure when the ECB will start worrying about inflation. In the US the combination of the Initial Jobless claims due and the anticipated earnings release of Wal-Mart the world’s largest retailer is expected to effect on sentiment in Wall Street but also on the Dollar-Risk play in the Forex space. The concluding events will be the Speeches coming from Treasury secretary Timothy Geithner and ECB chairman Jean Claude Trichet which always gather attention.
Technical Analysis
Gold/USD, Hourly
Bearish scenario– After failing to break the 1120-1125 zone the pair will modestly retreat to the lower Fibonacci support levels to regain momentum
Target A– 1110
Target B-1104
Bullish Scenario– A break of the 1120 would push the pair to look for a new record which according to the latest trends is around 10 to 15 Dollars above
Target: 1135
Daily Forex Market Analysis provided by eToro
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