Dollar and US stocks fell on profit-taking

December 11, 2014

The rebound of majors against the dollar continues in the light data day. As the yearend closes and central banks remains at their current monetary policies in their last meetings in 2014, traders are closing their bull bets on the dollar. Short-term reversal signs showed on daily charts of most majors against the Dollar.

Reserve Bank of New Zealand just published its statement, noting that the board will not consider cutting the interest rate in advance. The board seems to be quite optimistic, though the slump of commodity prices are threatening the prospect of New Zealand’s economic growth and inflation expectation. Kiwi Dollar bounced from 0.77 support level to over 0.78 after the statement, recovering all the loss of this week.

The Dollar Yen fell to the 118 mark again this morning. Although the correction has been over 400 pips, it may fell to a lower level under the background of a weak dollar. Yen has fallen over 1700 pips in the recent 6 weeks and the 61.8% retracement is lying near 115.50. Let us observe whether the 118 mark can support the pair today.

We can see the gold price now is under pressure from the $1240 resistance level and the long-term downward trend line that has been formed since September 2012. The participants now are hesitating at this level, as such a breakthrough before yearend requires support from fundamental aspects. As the Fed’s rate hike is coming based on the solid recovering job market, the possibility of breakout is quite low.

Back to the stock markets, the Shanghai Composite rebounded 2.93% to 2940 yesterday, recovering most loss on Tuesday. ASX 200 lost 0.45% to 5259. The Nikkei Stock Average was down 2.25% on the stronger Yen. The European markets were still suppressed by the risk that Greece may quit the Euro area, the UK FTSE lost 0.45%, the German DAX added 0.06% and the French CAC Index was down 0.84%. We finally witnessed a major fall of the US market followed the weakness but reversed most loss in the afternoon session. The S&P 500 closed 1.63% lower to 2026. The Dow lost 1.50% to 17533, and the Nasdaq Composite Index slumped 1.73% to 4684.

On the data front, Australian Unemployment Rate will be released at 11:30 AEDST. At midnight, traders will keep an eye on US retail sales and unemployment claims.

Have a great trading day!

Anthony


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