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Wall Street Goes Bullish

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Aug 26, 2009.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
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    By Mercaforex

    The U.S. dollar after its last gains, once again, lost ground against the Euro and the Japanese Yen. Yesterday, the U.S. stock market went bullish, mainly, because Consumer Confidence figures and the data coming from the U.S. Housing Market, generated optimism regarding the U.S. economy. During yesterday’s trading session, Crude Oil Value went bearish. However, Wall Street maintained its bullish trend since the opening as U.S. President, Barack Obama, nominated Ben Bernanke for a second mandate of four years as Federal Reserve Chairman. Obama stated Bernanke´s attitude and courage helped to avoid a new Big Depression in American soil. The Dollar went bearish because of positive economic data, and mainly these events caused Wall Street´s bullish trend and optimism generated in the market. The U.S. Consumer Confidence, which determines the mood of consumers in regard to economic condition showed a number of 54.1 with previous readings at 47.4. Also the S&P/CS Composite-20 HPI, which determines the annual change in the average price of a single-family home in 20 metropolitan area showed a reading of -15.4% above the forecasted number of -16.3%. This indicator hinted that U.S. Housing Market is showing signs of recovery, a critical trend that should help U.S. economy if maintains this way. Houses Prices remain 30% below the highest figures of 2006, but this trend should relieve Banks and property owners. The nomination of Bernanke for a second mandate as U.S. Federal Reserve Chairman was a decision that generated optimism between investors, and also helped for this growing optimism of consumer confidence numbers and the housing market data. Wall Street advanced since its opening. The U.S. Dow Jones advanced 0.32%, reaching 9.539.29 units. The Standard & Poor’s 500 advanced 0.24%, and the NASDAQ Composite advanced 0.31% reaching 2.024,23 units.
    Bernanke’s nomination is awaiting approval by U.S. Senate, and now may present new hurdles despite some critics. Some analysts argue that he reacted slowly to avoid the crisis, after which, Bernanke reduced interest rates and implemented new measures to avoid a U.S collapse. As for today, we are waiting a full economic calendar. The Durable Goods Orders, the Core Durable Goods Orders, the New Home Sales and the Crude Oil Inventories are going to be issued. The Market is going to be very volatile when these indicators come and if they give us positive figures, Wall Street will take a new boost, and the U.S. dollar should retreat. But if Wall Street doesn’t show a strong impulse, as we saw lately, the U.S. dollar could gain some ground. During yesterday’s trading session, Crude Oil Value lost 3.1%. After reaching the level of 75 USD, Crude Oil Value lost ground because investors took profits, after Crude Oil Value reached 10 month high. If U.S. indicators continue to show positive numbers, risk appetite will increase and the Euro will advance.

    During Tuesday’s trading session the Euro advanced against the U.S. dollar, after stock markets worldwide went bullish. Yesterday, from the Euro Zone came the final GDP numbers from Germany, which determine the total worth of all goods and services produced by the economy and showed a reading of 0.3%, as was forecasted. A solid economy presents investments opportunities, and the improvement of the German economy may present new challenges. As for today, we are waiting the German Import Prices which are forecasted to come in lower than the previous reading. Also, the German Ifo Business Climate, which is a leading indicator of economic health is coming today. Analysts estimate that this indicator is going to influence the market highly, and is forecasted at a number of 89.1 with previous readings at 87.3. Germany is still showing positive signs, and the market and the Euro should react bullish. In this sense the European Commission President, José Manuel Barroso, stated that the European economy is not in a “solid economic growth” although be watched positive signs. Barroso stated that the effects of the financial and economical crisis are still in Europe and that European Members should afford a long way before recovery. Germany and France went out from recession in the second quarter, and analysts suggest that the recovery is mainly because financial packages or stimulus packages provided by the United States, and not because of a real economic recovery. In this same line, U.S. President Barack Obama, warned on Tuesday that U.S. economy should affront a long way before its final expansion. The Euro may go bullish today, if the market shows optimistic signs and take a new impulse.

    The Sterling once again lost ground against the Euro, and maintained its bearish trend against the European currency during yesterday’s trading session. The UK the BBA Mortgage Approvals were published yesterday, which determine the level of home loans issued by the BBA during the last month and showed a reading of 38.2K when was estimated a reading of 37.9K. In this sense, large purchases tend to be made by consumers that are optimistic and confident in their financial position. Additionally, increased consumer borrowing tends to lead to increased consumption, a key driver of the overall economy. The economic health of the British economy is very vulnerable nowadays. As for today, there are no high impact data in the UK calendar, but tomorrow the Nationwide HPI will be published, which determines the changes in the selling price of homes with mortgages and is forecast a reading of 0.6%, when previous reading was 1.3%. The Prelim Business Investment and is expected to be published tomorrow with a reading of -3.6%, when previous reading was -7.6 %. The CBI Realized Sales, which determines the level of a diffusion index based on surveyed retailers and wholesalers will also be published tomorrow, and is forecasted at -11, when previous number was -15. Tomorrow will be a very interesting day for the Sterling, as its own indicators are going to impact highly in the market. If the economic indicators take the market by surprise, and we observer economic improvements in the UK economy, the Sterling should advanced against the Euro. Finally, on Thursday trading session, the British Consumer Confidence numbers will be issued and are estimated at -24, almost without change, and this shows the rate of difficulty of England’s economy evolution. Investor will follow the British Pound closely today as the Sterling will be influenced by the Euro Zone indicators and the stock market evolution.

    The Japanese Yen went bullish against the U.S. dollar throughout Tuesday’s trading session as U.S. stock market went bullish. The U.S. Dow Jones advanced 0.32%, reaching 9.539,29 units. The Standard & Poor’s 500 advanced 0.24%, and the NASDAQ advanced 0.31% reaching 2.024,23 units. U.S. stock markets went bullish, mainly, because American Consumer Confidence figures and the data coming out from the U.S. Housing Market, as they generated optimism regarding the U.S. economy. Also the nomination of Bernanke helped the U.S. stock market to go bullish. Lately we observed how Wall Street run out of steam, but these events were enough to boost the U.S. stock market another day. On the other hand, yesterday’s trading session, Crude Oil Value afforded resistance level of 75 USD, and failed to break that level and fell down more than 3%. After the 10 month high levels, investors took profits and sell the preset commodity. Nevertheless, some concerns continue to spread in the market regarding time and speed of the U.S. economic recovery. Because of that we observed some instability in the stock markets. Crude Oil Value fell 2.32 USD and reached 72.02 USD per barrel. The Japanese Yen will be influence by the U.S. dollar trend and the stock markets worldwide. Tomorrow, the U.S Crude Oil inventories will be published, and they will play a key role in the Crude Oil Value.

    Trading The Channel, GBP, SPX

    Yesterday’s technical’s are still in play today. However, yesterday we had another selling tail. Traders are not allowing the market to push higher. Each attempt is met with strong selling that brings us to or near the opening price. Resistance 1035.75, and 1044.3, Support 1018.

    Looking at the four hour chart we can see yesterday’s decline in the gold market. And yet we seem to be making an attempt to come back up. While we were not able to break or even near the previous lows, we have been pushing up relatively slow and steady. And as we all know “slow and steady wins the race”. We are currently trading above the 948.68 support, and I would expect us to push up towards the $955. This would take us past resistance of 954.40. The dollar has been acting slightly stronger lately, but some expected positive economic news might revitalize the upwards momentum in the other markets, taking gold along with them. Support 942.93, resistance 960.52.

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