Market Movers of the day
Europe
U.K Halifax house price index better than expected at 1.4%.
U.K Manufacturing production worse than expected at 0.0%
U.K Industrial Production worse than expected at 0.0%
Americas
Canada’s housing starts better than expected at 159.00k
Canada’s rate decision at 0.25%
The U.S stock market presented another disappointing session as economic data and news headlines weighed on the intraday session. The start of the session was characterized by a major drop as U.S traders were influenced by the Asian and European markets. The FTSE for example, finished the session with a loss of -1.65%, just above its 50 day moving average.
Weakness came as the Wall Street Journal posted fresh news that Moody’s Investors Service believes the U.S and the U.K need to trim their deficits otherwise their respective AAA rating could be jeopardized. Furthermore analysts at Fitch stripped Greece of its A-rated status. One must note that a part of the problem is due to Greece’s capital problems and high unemployment rate, which now lies at 9.2%.
Despite the intraday weakness, Obama gave it his best shot to try to support the markets, calling for new infrastructure projects and tax breaks for small businesses that will help the unemployment situation. Even thought recent numbers showed a decrease of 0.2% compared to September’s result and further jobless of only 11k, the current unemployment rate is still at double digit levels of 10%.
This time round it was the energy sector that weighed the most on the markets, closing with a loss of -1.70%. The financial sector dropped by only a mere 0.9%. The broader market S&P500 finished the session with a -1.03% loss, above major support.
S&P500 Daily Chart
BOC Unchanged, Japan Provides Further Stimulus
On the Forex market the Dollar index broke its trend line resistance and 50 day moving average as investors preferred the Dollar safe-haven compared to other riskier assets. Even though the U.S received a warning regarding its huge deficit, investors fled to the Greenback arming up against a possible equity drop.
In addition, the Japanese Yen received a boost during the session after Prime Minister Yukio Hatoyama announced that his administration intends to inject another 7.2 trillion yen ($81 billion) into the system. This was following last week’s announcement of a 10 trillion yen credit program to support the economy and following recent GDP data which showed a worse than expected result. Gross domestic product rose at an annual 1.3%, slower than the 4.8% reported in preliminary figures last month. Furthermore according to the numbers the economy expanded by only 0.3%, compared to the 1.2%, previously reported.
From a technical point of view the Yen received strength, boosted by its recent correlation to the equity market. The USD/JPY dropped throughout the session but found support above of 87.60.
The Bank of Canada made no surprises yesterday holding its central rate at a low of 0.25%. In the statement that followed, the BOC said their economy is showing positive signs compared to previous months and that Canada’s growth is expected to become more “solidy entrenched” in the future. Furthermore the bank touched on inflation, stating that it will remain moderated and return to the 2% target level.
The Day Ahead
Similar to yesterday’s session, today’s’ schedule holds an interest rate decision. This time round the RBNZ will take the stage. The markets are expecting a no-change status, which should leave the bank’s central rate at 2.5%.
In addition, England is scheduled to release its trade balance numbers and Australia will release its Employment change and unemployment rate. The employment change is expected to show a lower increase of 6k, compared to the previous figure of 24k, while the unemployment rate is expected to jump to 5.9%.
Daily Forex 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.
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