Risk Appetite Drives Gains Ahead of Non Farm Payrolls | March 31, 2011

March 31, 2011 By
USDJPY

Strong greenback sentiment pushed the yen lower intraday

Good morning. Equity and Commodity markets responded to ADP Employment Data on Wednesday with an increase in risk appetite recorded. Reporting 201,000 for the period, the figure was slightly below expectations of 210,000. Economists were looking for indications of buoyancy in the job market ahead of Non Farm Payrolls data on Friday.  Across the atlantic, UK Consumer Confidence figures fell in line with forecasts. Little unchanged, the market looked at recent pressure from Services Sector growth and highlighted that a tightening in monetary policy could be on the cards.  Elevated inflation levels have supported the argument. Libyan forces led by Gaddafi pushed rebels back in the east of the country. The continuing concerns over the stability in the region, led to a quiet session for Light Crude Oil. Today will see Initial Claims, Chicago PMI and Factory Orders reports released in the US.

On the equity market front, the Dow Jones finished the session 72 points higher with broad sector based strength recorded. News that Berkshire Hathaway’s second in charge resigned sent the stock lower in after hours. The Wall Street Journal reported that David Sokol had left the company under a cloud of speculation involving trading in Lubrizol Corporation.

On the currency front, the US Dollar rallied against the Japanese Yen on Wednesday, with a buoyant Japanese equity market contributing to gains. Traders were comfortable with holding US dollars as speculation rose that the Japanese government would extend budget relief in light of the quake and tsunami disasters. The Nikkei newspaper cited that 2 trillion yen could become available. Economists are keenly awaiting Non Farm Payrolls on Friday for an indication of the strength of the recovery. The USDJPY traded at 83.04. Continuing to test new levels, the Aussie dollar rose to 1.0311 during the Wednesday session. Buoyant commodity prices coupled with the possibility of a hike in interest rates contributed to the movements. Traders pushed the Aussie dollar into a range late in the session with profit taking, subduing volatility and volume. The result of the State election in NSW was also cited as a key measure of strength in the AUD.  Bucking the trend, the GBPUSD rose on Tuesday with Services Sector Growth data supporting gains. Indicating a 1.3% rise for the period, the market began factoring a tightening in monetary policy. CPI and inflationary pressures have concerned traders and the Bank of England, especially in light of a recovery in the US economy and global demand. The GBPUSD traded at 1.6053.

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Markets Await Key Non Farm Payrolls | March 30, 2011

March 30, 2011 By
AUDUSD

Profit taking weakened the Aussie Dollar on Tuesday

Good morning. Equity markets finished the Tuesday session on a positive note with traders eyeing key Non Farm Payroll Data later in the week. Consumer Confidence figures early in the session pushed the indices lower before a late recovery. Recording 63.4 for the month of march, the result was slightly below initial expectations of 65. Economists highlighted that Initial Claims, Non Farm Payrolls, Unemployment and Factory Orders later in the week will define the trends for both the equity and currency markets. Light Crude Oil weakened slightly, while Gold held its current level. Japanese Government Officials on Tuesday commented on corporate tax cuts and nationalisation of Tokyo Electric in light of recent events. Discounting the possibility of both, the market reacted negatively with a slight fall in the Nikkei on Tuesday. Emerging Markets experienced volatility during the session, with Turkey leading the charge. Citing political unrest in Syria, the market was uncertain as to the economic and political impact the situation would cause on its neighbour.

On the equity market front, the S&P500 closed 0.7% higher with the retail, technology and entertainment sectors driving gains. CBS Corporation received a positive outlook with Analysts highlighting a positive shift in advertising revenues. Retailer Van Heusen announced a strong quarterly result, with the stock recording an 8% gain.

On the currency front, the Aussie Dollar began the session on a strong note before weakening late in the day. Profit taking coupled with speculation surrounding retail sales data set to be released later in the week in Australia, were highlighted as contributing factors. Non Farm Payroll Data in the US will also influence the trend, as markets expect buoyant data. Traders continue to watch monetary policy comments by the RBA and how the recent events have impacted growth in the country. The AUDUSD traded at 1.0231. A shift in sentiment helped drive gains in the greenback against the Japanese yen on Tuesday. The tankan report will be released in Japan on Thursday with traders uncertain over the manufacturing conditions and general health of the economy. Markets previously anticipated a fall in overall business confidence for the period. Governmental officials commented on the fukushima nuclear plant situation, citing the possibility of complete fallout. Initial indications of low radiation levels and limited contamination have been discounted. The USDJPY reacted with a strong trend late in the day. It traded at 82.17.

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Consumer Spending Data Support Equity Markets | March 29, 2011

March 29, 2011 By
USDCAD

Canadian Dollar strengthens against the greenback, with traders eyeing possible gains in Oil.

Good morning. Equity markets reacted to buoyant Personal Spending data on Monday with a rise in the major indices. Announcing that Personal Income had fallen in line with initial forecasts of 0.3%, the market was happy with a 0.7% rise in spending. This was expected to top 0.5% for the period. Across the Atlantic, European banking concerns were laid to rest with Central Banker Trichet highlighting the potential for further growth in the economy and inflation. The comments come as traders forecast a tightening in monetary policy. Stability in the region could translate into a reduction in borrowing costs. Rebel forces in Libya announced on Monday that they had secured several major towns along the coastline. One of the areas is a key Oil distribution port. This led the market to speculate over the viability of oil supply and exports. Economic data set to be released on Tuesday includes Consumer Confidence and Case Shiller City Index. Markets are factoring in a score of 65 for the march confidence figures.

On the equity market front, the Dow Jones opened the session on a positive note with the tech sector leading the way. Nvidia Corp rose 4% off the back of a broker upgrade to outperform. Apple opened firmer with the release of the IPAD2 expected to influence earnings growth. The conservative movement led traders to believe that the market had already factored in much of the demand for the product.

On the currency front, the Japanese Yen weakened against the US Dollar on Monday with concerns over nuclear waste playing havoc on the currency. Reporting contamination in the seas of Fukushima, the Japanese government was quick to comment on the situation, highlighting the potential for further radiation leaks. Markets reacted to key US personal spending and income data with a rise in spending and a flat income figure recorded. The USDJPY traded at 81.79.  After breaking through 1.03, the AUDUSD weakened to trade at 1.0259 late in the day. Heightened awareness of the carry trade scenario, helped support the currency, with traders eyeing the potential for further Aussie investment. Economists noted that yield was still a key driver, with the RBA’s recent comments driving gains. A tightening in monetary policy could spark a surge in buying pressure and demand.  The Canadian dollar rose significantly against the greenback on Monday, with traders eyeing elections in the country. Initial strength in the Oil price drove gains, before weakening midsession. The Canadian elections are expected to be hotly debated with expectations of a close result. This will further impact market movements and volatility in the coming months. The USDCAD traded at 0.9749.

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GDP Drives Market Gains on Friday | March 28, 2011

March 28, 2011 By
EURUSD

Euro Aussie dollar weakens as risk appetite supports the AUD.

Good morning. Equity markets finished the Friday session on a positive note, with GDP figures boosting sentiment. Reporting a 3.1% rise for the February period, the market initially expected 2.9%. The Deflator fell in line with estimates. Japanese officials cited radiation problems in waters around the Fukushima nuclear plant, leading to a temporary spike in the US dollar. Allied forces continued to attack Libyan forces, with President Obama citing the need for a unified force against Colonel Gaddafi. This week will see a slew of economic data. Personal Spending figures (market expects 0.5%), Personal Income (market expects 0.3%), and Pending Home Sales (market expects 0.3%) on Monday, Consumer Confidence (market expects 65) on Tuesday, ADP Employment (market expects 210,000) and Crude Inventories on Wednesday, Initial Claims (market expects 383,000), Continuing Claims (market expects 3,700,000), Chicago PMI (market expects 69.5), and Factory Orders (market expects 0.4%) on Thursday, Non Farm Payrolls (market expects 185,000), Unemployment Rate (market expects 8.9%), Construction Spending (market expects -0.7%), and Hourly Earnings (market expects 0.2%) on Friday.

On the equity market front, the Dow Jones was 50 points higher on Friday with technology stocks driving gains. Oracle released buoyant corporate results in after hours trade during the previous session. General Market sentiment also supported the IBM share price during the session.

On the currency front, comments from the IMF over the recent G7 intervention, helped support the greenback against the Japanese Yen on Friday. Trading at 82.17, the currency reacted to speculation that the BOJ could be looking to further support the greenback and weaken the yen. Japanese government officials noted on Friday that the radiation levels at Fukushima plant in the north east of the country were a result of a leakage in core number 3. Officials were concerned that the level of contamination could be dire to the surrounding areas. This news had little negative impact on the currency, with traders continuing to focus on the potential growth from the rebuilding phase. The Australian Dollar continued to test resistance on Friday with the currency pair rallying to 1.0271. Offshore investment in the AUD contributed to the gains, as traders eyed a possible rebound in commodity prices. Markets continued to factor in a buyback from BHP and a boost in mineral demand from Japan and China. The recent crisis in Japan has led traders to reassess the demand for resources from the region and the impact this would have on commodity prices.

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Market Factors In Buoyant Earnings | March 25, 2011

March 25, 2011 By
USDJPY

Japanese yen stabilised after intervention measures late last week stemmed the rise in the currency.

Good morning. US Equity markets closed higher overnight, with traders and analysts factoring in the possibility of a buoyant earnings season. Initial Claims figures were released with 382,000 recorded for the February period. Economists had forecast 384,000. In other economic news, Durable Orders came in well below estimates with -0.9% for the February period. Durable Orders measures the activity of Goods that have a lifespan over 3 years. Key economic data released on Friday includes GDP and the GDP Deflator. Commodities during the Thursday session, took a break with Gold slightly lower and Light Crude flat. Tensions in Libya and the Middle East had a relatively subdued effect on movements during the session. Fed Chief Bernanke announced that the Federal Reserve will begin holding press gatherings to coincide with monetary policy decisions. The move is expected to allow for further debate and more transparency. The move was applauded by the US government.

On the equity market front, the Dow Jones rose 84 points with technology giant Oracle driving gains. Reporting a rise in net income of $2.1 billion for the period on revenues of $8.76 billion, the market initially factored in $8.7 billion. The stock rose 3.5% in after hours trade. Research In Motion released a disappointing profit forecast with Wall Street expecting the company to perform well for the quarter. Falling 10% for the session, the company highlighted an earnings range of between $1.47 and $1.55 a share.

On the currency front, the Japanese Yen reacted to export data on Thursday with the currency pair trading at 80.88. Reporting a rise of 9% for the February period, the market factored in continued growth patterns and demand from China and other Asia superpowers. Reporting a surplus for the period, the market initially reacted to the news. Safe haven trading continues to heighten volatility, with economists forecasting further woes in Economic growth. Rebuilding is touted to spur an increase in the price for the pair, with Japanese government officials confident that the economy would not be hindered.  Rising past 1.02, the Aussie dollar reacted to RBA comments. Indicating a rise in overall household savings, the Reserve Bank was conservative in their growth forecasts with debt being raised as a key issue. Recently the market has factored in the potential for a rate rise in light of a recovery in trading conditions. Situations in Japan and Middle East continue to impact the demand for the Aussie dollar, with many economists eyeing commodity strength for buying opportunities.

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