Wall Street closed in green territory. American shares rose along with commodities Thursday as the dollar fell against the euro, continuing what one analyst said is Wall Street’s call for continued stimulus from the Federal Reserve. It used to be that oil went up and stocks went down. But now everything is going up in tandem from the Fed’s quantitative-easing program, which is throwing money into the economy and which investment banks use to speculate. The market’s decline really underscores the economic weakness that is out there, or pending.
Erasing a 93-point drop, the Dow Jones Industrial Average gained 65.89 points to close at 12,695.92. The S&P 500 Index added 6.6 points to 1,348.65 while the Nasdaq Composite Index climbed 17.98 points to 2,863.04. Thursday’s U.S. economic data illustrated a drop in jobless-benefit claims last week and revised retail sales that signalled consumer spending in the first quarter might have been more robust than first thought. But another report had wholesale prices rising more than anticipated in April on higher energy and food costs.
Crude-oil prices retreated in electronic trading on Friday as the U.S. dollar moved higher, but held their ground above $98 a barrel. Light, sweet crude for June delivery lost 61 cents to $98.36 a barrel on the New York Mercantile Exchange during Asian trading hours. Oil prices fell as low as $95.25 in North American trading on Thursday, after the International Energy Agency cut its forecast for growth in global oil-product demand in 2011, before recovering to finish higher. The IEA said that annual growth in global oil demand was “near zero” in March for the first time since 2009.
Today’s Important Economic Announcements (GMT)
6:45 AM EUR French Prelim Non-Farm Payrolls q/q
7:15 AM CHF PPI m/m
8:00 AM EUR ECB President Trichet Speaks
9:00 AM EUR Flash GDP q/q
12:30 PM USD Core CPI m/m
1:55 PM USD Prelim UoM Consumer Sentiment
At the onset of Thursday’s trading session, the Australian dollar was under tremendous pressure after the April employment report printed a net 22,100-person drop in payrolls. Such a remarkable upset would normally keep the market under pressure; but we are reminded of the fact that there are greater concerns at the moment. The Aussie currency would regain much of its losses through the day as risk appetite bounced back. Being supported by 1.0536, AUD/USD rebounded from 1.0567. Another fall to re-test 1.0536 support is still possible later today, a breakdown below this level will trigger another fall towards 1.0400. Expect this pair to weaken today.
Stop Loss: 1.0749
Take Profit: 1.0571
Much like the Australian dollar, the Japanese yen is the product of its carry positioning. When risk trends are quiet, traditional fundamentals may bleed in. Otherwise, the funding currency will be jostled by capital flows. So, news that China was raising its banks’ reserve requirements and the Bank of Japan was increase its legal reserves would matter little when European and US capital markets began their climb. USD/JPY stays above a trend line on 4-hour chart, and remains in uptrend from 79.58. Further rally is still possible in a couple of days, and target would be at 81.85 area. Support is at 80.65, only break below this level would trigger another fall towards 79.58 previous low.
Stop Loss: 81.03
Take Profit: 80.26
Interest rate expectations for the British pound are affected by inflationary pressures. With only 39 basis points worth of hikes priced in over the coming 12 months, one of the sterling’s most appealing traits has essentially vanished. So, unlike the euro which is able to compensate for its financial troubles with a competitive (and still rising) yield, the pound is simply left to its fundamental troubles. We were reminded what austerity can do this past session when the NIESR GDP estimate for April slowed to 0.3 percent expansion and industrial production posted a similarly weak rise. GBP/USD continued its downward move, and the fall from 1.6745 extended to as low as 1.6235. Deeper decline is still possible later today, and next target would be at 1.6150-1.6200 area.
Stop Loss: 1.6377
Take Profit: 1.6235
Published by www.SolidityBrokers.com