Market Brief
The Usd was weaker in the Asian session, as the recovery story gains traction. The EurUsd traded to 1.3640 from 1.3564, while the UsdJpy was range bound trading between 97.13 and 97.70. While Wall Street closed lower on profit taking (S&P -2.15%), Asian regional indexes were able to rebound. Overnight Fed Chairman Bernanke attempted to reassureinvestors that Fed monetary policy will contribute to a strong Usd. The Chairman stated "the USD will be strong because the US economy is strong". In addition, he expects the greenback to remain the world's reserve currency and the positive impact of the US Bank Stress test results. The knee jerk reaction was the market selling EurUsd and GbpUsd down to their opening levels.
Jean-Claude Trichet commented that the global downturn had bottomed out with some large economies already on the path to recovery. China's exports fell on an annual basis by much more than the market expected, down 22.6% y/y in April vs. -15.3% exp, after -17.1% in March. However, a detailed look at the numbers suggests that the underlying momentum may not be as bad as the headline indicates.
Gold fell victim to an early rally in dollar strength, pushing prices to as low as $909oz in intraday trading. Price action was choppy for the most part on the COMEX, with lack of any real momentum constraining the precious metal to a range close to Friday’s highs and lows. We saw a wave of heightened risk appetite driving a strong selloff in the dollar, thus lifting commodity prices higher. The Euphoria has since calmed, and overly bullish Investors are confronted with a harsh reality, which is we have a long journey in pursuit of a market recovery. While corporate earnings have been better than expected, particularly in the financial sector, much of the performance was subsidized by government injections of much needed liquidity to revive the financial markets. Technical analysis will be valuable in determining ranges, but economic fundamentals will prove critical as Traders look for evidence to buy into bear-market rallies.
Today we have both US and UK trade balance numbers coming out. We expect worse than consensus numbers with £-7.4b for UK and $-31b for the US .
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 9,298.61 | -1.62 |
| Hang Seng Index | 17,153.64 | 0.38 |
| Shanghai Index | 2,618.17 | 1.48 |
| FTSE 100 Index | 4,440.68 | 0.11 |
| DAX Index | 4,892.93 | 0.53 |
| SMI Index | 5,354.07 | -0.09 |
| DJIA futures | 8,457.00 | 0.65 |
| World Markets | Current Level | % Change |
| Gold | 918.42 | 0.55 |
| Silver | 14.12 | 1.18 |
| VIX | 32.87 | 2.55 |
| Crude wti | 59.3 | 1.36 |
| USD Index | 82.47 | -0.43 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Trade Balance £bn mar | -7.2 | -7.3 | GBP / 8.30 |
| Industrial Production mar | -0.8,-12.8 | -1.0,-12.5 | GBP / 8.30 |
| Manufacturing Output mar | -0.9,-14.0 | -0.9,13.8 | GBP / 8.30 |
| Manuf. Production mar | -- | -15 | ZAR / 11.00 |
| Trade Balance C$ | 0.5 | 0.1 | CAD / 12.30 |
| Trade Balance $bn | -29.4 | -26 | USD / 12.30 |
| Budget Balance $bn apr | -63 | 159.3 | USD / 18.00 |
Currency Tech
AUDUSD
R 3: 0.8520
R 2: 0.8097
R 1: 0.7739
CURRENT: 0.7661
S 1: 0.7460
S 2: 0.7337
S 3: 0.7233
EURJPY
R 3: 138.57
R 2: 137.40
R 1: 135.57
CURRENT: 133.54
S 1: 130.72
S 2: 129.87
S 3: 128.95
USDSGD
R 3: 1.4980
R 2: 1.4882
R 1: 1.4803
CURRENT: 1.4574
S 1: 1.4500
S 2: 1.4445
S 3: 1.4270
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
