U.S. stocks ended with mild gains Thursday, putting two major indexes in positive territory for the week, as sentiment improved on the heels of a lower claims for jobless benefits and decent quarterly results in the retail sector. The Dow Jones Industrial Average advanced 45.14 points to 12,605.32, with 19 of its 30 components rising. The S&P 500 rose 2.92 points to 1,343.60 while the Nasdaq Composite Index gained 8.31 points to 2,823.31. The Nasdaq has slid 0.2% for the week even though the S&P500 added 0.4%. The major indexes are down for the month of May, but still sitting on gains for the quarter and year.
The Conference Board said its leading economic index fell 0.3% in April, the first monthly decline since June. But equities rebounded midday, supported by earlier data on weekly jobless claims. The Labour Department said 409,000 people filed first-time claims for jobless benefits last week, down from an upwardly revised 438,000 the week before. Jobs are improving but sluggish so the probability of a near-term correction has increased but that a pullback would then pave the way for a bull market to continue.
U.S. crude-oil futures rose in electronic trading during Asian hours Friday to recover some ground they lost in the North American session in response to disappointing economic data. Oil rose 57 cents to $99.01 a barrel. But it was shy of the $100 psychological-barrier in the absence of any significant directional cues from the U.S. dollar index and amid mixed performance on Asian bourses. We still maintain that most of the U.S. macro numbers we have been seeing lately are pointing to a significant deceleration in growth and this is bound to keep commodity rallies in check, especially since there are similar concerns about growth prospects emanating from most countries.
Today’s Important Economic Announcements (GMT)
Tentative JPY BOJ Press Conference
8:00 AM EUR Current Account
11:00 AM CAD Core CPI m/m
12:30 PM CAD Core Retail Sales m/m
The US dollar is mixed versus the majors and continues to be traded inside previous defined price ranges. Yesterday’s dollar strength on the back of Tuesday’s Fed meeting minutes faded after traders once again found the euro attractive given the disparities between US and European monetary policy. Highlights from the Fed’s previous policy meeting show the Fed’s plan for exiting the ultra-loose monetary policy but failed to provide traders a timeline as to when the tightening will begin. The EUR/USD found bids at the 1.4200 level but remains capped at 1.4300. Dollar bulls will need to make a stand between the 1.4300-1.4350 levels to keep the momentum in favour of the greenback.
Stop Loss: 1.4236
Take Profit: 1.4290
Sterling was trading higher after better than expected UK retail sales. However, traders may not want to look too deep into the data as the strong consumer numbers may have been driven by one off events such as the Royal Wedding and the Easter holiday. Markets have also been flooded with bearish sentiment for sterling with the changing of the guard at the BoE MPC. Cable has support near 1.6100 and 1.6050 near the rising trend line off of the May 2010 low. Resistance comes in at this week’s high at 1.6300. The pair remains in downtrend, the bounce from 1.6105 is treated as consolidation of downtrend. Key support is at 1.6105, as long as this level holds, another fall is still possible, and next target would be at 1.6000 area.
Stop Loss: 1.6249
Take Profit: 1.6198
The USD/JPY is pushing the 82.00 level on the back of weaker than expected GDP numbers. The data shows the Japanese economy was likely headed for a recession prior to the earthquake and tsunami. USD/JPY will likely target retracement levels from the April to May move at 82.50 followed by 83.25. On the daily chart the yen hit its daily long target at 82.103 within the range it’s been in for over 8 months. No changed in our view, USDJPY remains in uptrend. As long as the trend line support holds, further rise is still possible in a couple of days, and next target would be at 83.00 area.
Stop Loss: 81.51
Take Profit: 82.12
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