Solid US data drove stocks and the US dollar higher – more gains to come | Vantage FX

Solid US data drove stocks and the US dollar higher – more gains to come

May 28, 2014

What a big night on the data front out of the US with a solid raft of data all outperforming expectations.

Durable goods (+0.8%), case Shiller house prices (+1.24%), Markit flash services PMI (58.4) and the Conference Board’s consumer confidence (83) were all stronger than expected.

The result of course has been that stocks rallied further – if somewhat cautiously – with the S&P 500 making an all-time intraday high as well as a record closing high of 1912 up 11 points to 1,912. The Dow hit 16689 at one stage before closing up 70 points or 0.42% while the Nasdaq was 1.22% higher at 4,237.

The Euro reversed of the previous nights move higher but once again Euro found support near 1.36.

Other than the overdone nature of the MACD Histogram and the proximity of the 200 day moving average it is hard to see what special about 1.36 which suggests someone is protecting a level at the moment.

As I noted yesterday however I would rather be short than long and believe it only a matter of time before Euro breaks wide open.

On European stock markets the growing expectation of easing in the EU from the ECB and the strength of US markets helped kick European shares to fresh multi-year highs. The FTSE rose 0.43% to 6,845, the DAX rose 0.49% to 9,941 but the CAC only rose 0.07% to 4,530. Milan however fell 0.42% while in Madrid stocks were 0.25%.

Locally on ASX futures market overnight the June SPI 200 contract is up 8 points to 5534 bid this morning.

Turning to other currencies sterling is off a bit against the USD at 1.6803 while USDJPY sits at 101.99.

The trendline for GBP is looming again – key level if the USD gets a wriggle on is 1.3750ish.

The Aussie is holding in well buoyed by the sentiment attached to the solid rise in stocks.

On commodities gold is down 2% to $1,277 as the solid rise in stocks and what looks like the prospect of a reasonable resolution to the Ukraine situation combine to sap the strength of the bulls. Silver fell a similar amount to $19.08 while Nymex June crude sits at $104.17 – still extremely high. Copper was up 1 cent to $3.19 lb while on the Ags it was carnage across the board with corn, wheat and soybeans all down around 1.8%.

On the data front today in Australia we get the release of the Westpac leading index on the economy and construction work done. Tonight we get German import prices, French consumer spending, German unemployment and then EU wide consumer and business sentiment. In the US its mortgage applications and the Redbook index.




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