Market Movers of the Day
Asia-Pacific
*Australia’s 3Q GDP worse than expected at 0.2%
Europe
*German PMI Services better than expected at 53.1
*German PMI Manufacturing better than forecasted at 53.1
*EU PMI Services better than expected at 53.7
*EU PMI Manufacturing better than forecasted at 51.6
*UK Jobless Claims Change better than estimated at -6.3K
*ILO Unemployment Rate lower than expected at 7.9%
*EU Core CPI worse than expected at 1.0%
Americas
*US CPI higher than expected at 1.8% annualized
*US Housing Starts worse than forecasted at 0.57M
*US EIA Crude Oil Stocks dropped 3.7M
*US Fed left interest rate unchanged at 0.25%
The Overall Sentiment
Equities
US stock markets rose as the Federal Reserve left benchmark interest rate unchanged and repeated its intention to maintain the current low level for an extended period of time. The S&P climbed 0.6% after the announcement but erased some gains to close with a modest advance of 0.1%. The tone of the Fed was optimistic, stating that the economy is gaining strength and specifying steps to start unwinding emergency measures. In Europe, the British FTSE 100 added 0.7% as the UK Jobless Claims dropped 6.3K last month and the Unemployment Rate fell for the first time since February 2008, showing encouraging signs about the economy starting to leave the recession behind. The German DAX advanced 1.6% as the PMI figures showed a better-than-expected gain, both in services and manufacturing sectors.
Forex
The Dollar strengthened as the Federal Reserve left rates unchanged at 0.25%. The market reacted in a volatile manner after the Fed released its statement, but as soon as traders came to the notion that rate hikes may occur earlier than expected from the optimistic tone of the Fed’s rhetoric, the dollar extended gains. With Greece raising concerns once again in the Euro-zone, having its credit rating downgraded, this time by Standard and Poor’s, the EUR/USD came close to breaking below the 1.45 level. Even falling after the Fed’s announcement, the Pound managed to close with a daily gain against the Greenback driven by positive sentiment on the drop in unemployment numbers. The Aussie dollar extended losses below 0.90 against its US counterpart on disappointing GDP figures that showed a 0.2% expansion in the third quarter, lower than market expectations. USD/JPY continued to strengthen but showed some reluctance to break the 90 level.
Commodities
Crude Oil rose sharply as the EIA weekly stockpiles report showed oil stocks fell 3.7 million barrels, more than the forecasted 2 million drop. Metals also gained, with Gold climbing close to the $1140 level in its biggest advance in two weeks and Silver rising to end around $17.70.
The Day Ahead
The day will start with New Zealand’s Business Confidence with an expected fall to 38.5 from a previous 43.4. Japan will release its Leading Economic index and the BoJ will start a two-day policy meeting that will end with the Target Rate Decision on Friday. UK Retail Sales numbers are forecasted to grow, assuming that the improvement in the labor sector affected consuming for the better. UK CBI Distributive Trades and Swiss ZEW Survey are also due for release during the European session. The Canadian CPI figures are expected to rise and for US Jobless Claims forecasts point to a 10K drop.
Technical Analysis
EUR/AUD DAILY
Bullish Scenario– The consolidation above 1.5950 could signal that the cross is gathering strength, confirming a double bottom formation.
Target A–1.6250
Target B–1.64
Bearish scenario– A break of 1.5950 downwards would generate a strong bearish swing, targeting the 1.58 support.
Target A-1.58
Target B–1.5620
Daily Forex Market Analysis provided by eToro
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