Another trading week started with gains yesterday, as the major U.S stock indices retraced all of Friday’s losses. Even though the financial sector weighed on the intraday session at start, due to a worse than expected report from Citigroup, investors looked past the report and drove the indices to higher ground.
On Tuesday, Citigroup posted a $7.6 billion loss for the last three months of 2009. According to the Los Angeles Times, this was the first loss since 2008.Even though Wall Street seems to be ignoring what is happening on Main Street; the Commercial bank’s report showed investors that the banking sector is still severely bruised and is still dealing with the economic recovery. Even J.P Morgan Chase Inc. which reported a profit last week still had losses in its retail lending and credit-card operations.
While the financial sector is still toying with the economic recovery, other sectors seem to be leading the indices higher. Healthcare was the leading sector of the day, closing with a gain of 2.42%. The S&P500 finished the session around its highs of the day after bouncing off minor support.
Forex
Similar to the equity session, the Forex market presented participants with an interesting intraday session, as the Euro plunged to a new 4 month low. The weak Euro had an effect on all the Euro crosses, sending them lower.
Economic data was the catalyst this time round, as German ZEW economic sentiment disappointed investors. The result came out under the expected 50 mark at 47.2, while the ZEW economic sentiment figure dropped to 46.40 points. According to the ZEW president Franz, “the way out of the recession is burdensome and long.
From a technical point of view, the EUR/USD now seems to be heading south but could find support on its upcoming technical support level around $1.4050. The EUR/GBP also continued lower yesterday, after breaking trend line support. This pair was influence by data from the Euro-zone and inflation data from the U.K.
According to the numbers, the price of goods and services in England continued to gain ground and jumped to 2.9%, way above the BOE’s comfort level of 2%. Economists were expecting a 2.6% figure after last month’s 1.9%. The core figure which excludes food and energy soared to a whopping 2.8%. Recent comments from the BOE have stated that inflation should increase to around 3% before coming down to tolerate levels.
Over in Canada the BOC maintained its overnight rate target at 0.25%. Even though the Bank acknowledged the recent recovery, officials decided to continue their QE program and leave their central rate around current levels until June. The Bank revised down their 2010 GDP forecast from 3% to 2.9% and mentioned that inflation shouldn’t be much of a problem.
Economic Data to Watch Out For
The U.K will take the spot light during morning hours today, and is scheduled to release its unemployment rate and MPC meeting minutes. According to economists the unemployment rate is expected to reach a high of 8%. Throughout the session, Canada and the U.S will take the stage. Canada will release its CPI figure, while the U.S is scheduled to release a wave of data including; housing starts, core PPI and building permits.
Daily Forex Market Analysis provided by eToro
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