Sydney (15/10/10) – The Dow Jones closed 30 points weaker on Friday with the tech heavy NASDAQ rising after buoyant corporate earnings. Fed Chief Bernanke did not surprise the market with the Central Banker highlighting the need for stimulus measures to combat slowing growth, credit liquidity and unemployment. CPI figures indicated a slight rise of 0.1% for the previous period. Economists were confused and uncertain as to the direction of the market, with buoyant manufacturing and retail sales data overshadowed by a drop in overall consumer sentiment. On the corporate front, Google’s strong earnings from the previous session helped support the nasdaq with the company reporting a 32% increase for the corresponding quarter. General Electric, however disappointed analysts with earnings lower than initial expectations. The stock fell early of the back the news before recovering towards the end of the session. Next Monday will see earnings season kick into full gear with Apple, IBM and Citigroupannouncing earnings. On the commodities front, Gold fell 0.5% to 1370. Traders have highlighted a possible ceiling at 1400 with a possible short term oversupply in the precious metal. Profit takers pushed Light Crude Oil futures 1.4% lower to $81.48. The Volatility Index also tracked oil with the risk measure weakening 4.2% to 19.03.
USDJPY>> The Yen continued to worry BOJ officials on Friday with the currency pair trading at 81.13. With the currency war between the greenback heating up, Japanese analysts are increasing becoming more bearish on corporate earnings and forecasts. The Nikkei was lower in trade in the afternoon with falls in leading export based electronics providers Canon and Panasonic.
AUDUSD>> Sitting just below parity, the Aussie dollar traded at 0.9948 towards lunch London time. Forecasting continued strength in the AUD due to high interest rates and GDP strength, economists were unable to give a time frame on when the pair would reach parity. Fed Chief Bernanke will comment on the economic news tonight with CPI and Retail sales data released.
EURUSD>> The Euro was stronger against the greenback leading up to important US Manufacturing, CPI and Retail sales data. Rising to 1.4096, traders were bullish on the pair, highlighting the possibility that the Fed may begin monetary easing and further asset purchases. The move would spur continued buying in the higher yielding currencies like the Euro, AUD and CAD.
USDCHF>>Opening the session slightly firmer, greenback sentiment started to waiver with the pair trading at 0.9518 at lunch. Looking to safety, in the form of the swiss franc, traders also took solstice in the perceived strength of the Euro zone and Switzerland. The yield differential is helping a number of the major currencies at the moment, with economists speculating that US interest rates could fall to 0%.
GBPUSD>>Cable followed the other major pairs on Friday with the currency hitting 1.6054. Lack of UK economic data had little impact on the rising GBP with the market awaiting important comments from Fed Chief Bernanke. Economists are painting a disappointing picture economically and will be interesting to see how the market reacts in the event of surprise data.
USDCAD>>After breaking through parity yesterday the Canadian dollar weakened on Friday with risk aversion supporting the greenback. Trading at 1.0060, economists also looked to important economic data from Canada, which would also provide an insight into the resource space.