Gold recovered late in the session, with short covering driving the price higher
Good morning. Equity markets finished the Thursday session on a positive note, with Producer Price Index figures supporting gains. Reporting a 0.8% rise in April, the figure beat market expectations of 0.5%. Initial Claims were also announced with a slight increase recorded for the period. This set the level at 434,000. Retail Sales fell to 0.5% from the previous 0.9%. In other news, commodities traded in a consolidated fashion with Gold reporting a slight fall. Light Crude Oil Futures continued to experienced heightened levels of volatility with a slight rise posted. China announced that it would raise bank reserve requirements in an effort to reduce inflation. This is the fifth time that Chinese officials have raised the capital requirements. Traders continue to speculate over the effectiveness of this strategy over tightening of monetary policy.
On the equity market front, the Dow Jones closed 0.5% or 66 points higher. Technology giant Cisco announced solid earnings, however the company reaffirmed their previous comments regarding the challenging market conditions. Analysts were disappointed with the results, translating into a 4.7% fall in the stock.
On the currency front, the Aussie Dollar fell to 1.0665 on Thursday, with jobs data indicating a contraction in the economy. A sharp fall of 22,000 for the period translated into a selloff in the currency. Economists began reassessing their long term interest rate and growth forecasts. Recent speculation that the RBA could lift rates in the coming months, has been laid to rest, with the Governor expected to keep policy at current levels. Relatively lacklustre session for the Japanese Yen on Thursday, with the currency consolidating at 80.91. The market reacted to news that the Japanese Current Account Surplus fell 34% as a result of the Tsunami and Earthquake disasters. Pressure on the economy from the manufacturing sectors has proved a cause for concern for the Bank of Japan. Intervention fears continue to influence the direction of the currency, as traders watch for a potential short term spike in volatility. UK Industrial Production data had limited impact on Pound Sterling with the currency trading at 1.6287. Rising 0.8% in March, the figure contradicted previous estimates. With European debt woes continuing to pressure the region, traders are cautiously watching the role of the Bank of England and whether or not monetary policy will shift in the short term. This could severely impact currency sentiment.
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