Market Brief
The Greenback and Japanese Yen gained on Friday as US consumer confidence fell in August to 63.2 from a previous reading of 66.0 in July, which is the lowest reading since March. The Yen outperformed the US Dollar and rose against all major currencies as risk aversion increased. Despite recent data from the Euro Zone which surprised the markets with positive GDP from Germany and France, it seems other factors still concerning the investors that probably we have not come to an end for the worst recession since World War II.
The Fed meeting results last Wednesday came along with expectations, with interest rates unchanged at 0-0.25% and reiterated that rates will stay at its current for an extended period of time. The positive side from the Fed meeting was the outlook on economy which was little optimistic. The British pound was pressured after BoE announced that it is extending its asset purchase program by £50 B to £175 B as inflation is expected to remain below the BoE’s target at 2%. The Aussie was lifted to a new 2009 high at 0.8478 after a speech from RBA Governor Stevens’ indicating that the bank could raise interest by the beginning of 2010, but quickly fell as commodity prices went down.
The equity and commodity markets are probably giving a sign that prices have topped up at least for the near term, and we have seen a divergence in global stock markets and emerging stock markets as MSCI world index made a new high last week and MSCI Emerging market index kept below 864.7 prior high.
U.S. stocks fell for the first time in five weeks as the unexpected drop in consumer confidence raised concern the steepest rally since the 1930s isn’t justified by economic prospects. The Standard & Poor’s 500 Index fell 0.6 percent to 1,004.09. The Dow Jones Industrial Average dropped 48.67 points, or 0.5 percent, to 9,321.4. The Nasdaq retreated 0.7 percent to 1,985.52. From China the sharp fall in Shanghai Composite Index could be a major reason in sending commodity prices down.
Commodity prices fell last week with CRB index falling below 260 levels, and gold closing below 950, while crude old lost its momentum closing at 67.51, suggesting that investors are more cautious now and need a clear fundamental signs of economic recovery in order to continue in the bullish momentum.
This week upcoming data will give us a clearer image on how the economy is performing, which could either change the investor’s opinion and drive stocks, commodities, and high yielding currencies up or continue to in the risk aversion theme. Focus will be on US manufacturing index released earlier today; inflation data from Euro Zone, UK, and Canada; consumer confidence in Germany; and US home sales.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 10,268.61 | - 3.10 |
| Hang Seng Index | 20,145.04 | - 3.58 |
| Shanghai Index | 2,870.63 | - 5.78 |
| FTSE 100 Index | 4,669.62 | - 0.94 |
| DAX Index | 5,234.89 | - 1.39 |
| SMI Index | 5,925.51 | - 0.99 |
| DJIA futures | 9,123.00 | - 2.02 |
| World Markets | Current Level | % Change |
| Gold | 938.59 | - 1.05 |
| Silver | 14.23 | - 3.32 |
| VIX | 24.27 | - 1.78 |
| Crude wti | 65.79 | - 2.54 |
| USD Index | 79.19 | + 0.38 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Trade balance, NOK bn Jul | -- | 22.4 | NOK / 08.00 |
| Trade balance, € bn (sa) Jun | -- | 0.8 | EUR / 09.00 |
| Empire State manufacturing index Aug | 2.00 | -0.55 | USD / 12.30 |
| Net long-term TIC flows, $bn Jun | -- | -19.8 | USD / 13.00 |
| NAHB housing index Aug | 18 | 17 | USD / 17.00 |
Currency Tech
AUDUSD
R 2: 0.8695
R 1: 0.8520
CURRENT: 0.8179
S 1: 0.8180
S 2: 0.8125
USDCAD
R 2: 1.1225
R 1: 1.1075
CURRENT: 1.1103
S 1: 1.0757
S 2: 1.0635
EURJPY
R 2: 138.72
R 1: 137.85
CURRENT: 133.36
S 1: 132.80
S 2: 132.10
USDMXN
R 2: 13.225
R 1: 13.145
CURRENT: 12.975
S 1: 12.789
S 2: 12.620
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
