Economic Data Rattled the Markets
Since the holiday season has brought about low market volume, economic data had a major impact on the U.S stock indices yesterday, sending them into lower territory. During pre-market hours, data showed that the retail sector had contracted even further during the month of March, while inflation data also showed a worse than expected figure, coming out at -1.2%.
The start of the U.S session was characterized by an intraday drop, as traders cashed-in on recent profits. The indices managed to regain some of their losses throughout the session, but failed to hold on to them, closing near their lows of the day.
The S&P500 closed down by -2.01%, while the Nasdaq closed the session with a loss of -1.67%.
Obama approached the public during yesterday’s session shedding some light regarding the state of the economy. Even though he was optimistic regarding his recently used methods to combat the deteriorating economy, ones that involved quantitative easing, he continued to mention that 2009 will be a struggling year. The President mentioned during his speech that even though the stock markets are taking the current slump in a positive way, the economy should expect further lay-offs and foreclosures. He also stated that even though banks are starting to ease up on their credit condition, there is still a long way to go before the financial system fully recuperates.
Bernanke also came out with some positive words yesterday, stating that the rate at which the U.S economy is contracting, is starting to slow down- something that could hint to a possible economic turnaround.
Two major pairs that have caught trader’s eyes over the last couple of session are the AUD/USD and the NZD/USD. Both the pairs are now trading lower today, after hitting major resistance. Over the last couple of weeks these two pairs have traded in correlation with the U.S markets, therefore yesterday’s negative session in the U.S, increased the short positions on the FX markets. As shown on the two charts below, these commodity currencies are now trading at critical levels, whereas further bullish strength could lead to a break.
On the Asian front, stocks followed the U.S’s momentum, starting the session in red. The Nikkei is currently trading down by over 1%, while the Hang Seng has managed to regain some its losses and is now trading in positive territory.
AUD/USD and NZD/USD at critical levels
On the Forex market, the Dollar index continued to trade around critical levels. Even though the U.S markets dropped by approximately 2% yesterday, the Dollar failed to show the same type of momentum, closing the session barely unchanged.
The Yen increased significantly against the U.S Dollar on speculation that the U.S recession is worsening. After dropping to a low of ¥98.15 the Dollar is now climbing higher and could find support above the ¥98.80 level.
Market Data to Watch Out For
The markets should stay relatively calm up until the U.S pre-market hours. Economic data from the U.S will take center stage today as inflation and production data is scheduled to be released. Consumer prices are expected to show a drop of -0.1% compared to last month’s 0.2% while the core result is also expected to show a decrease. In addition, the famous Beige book is scheduled to be released and will show the economic condition of 12 states.
Daily Market
