Wall Street closed in green territory, as encouraging data on jobs and retail sales suggested the economy was riding out a recent rough period. The Dow Jones Industrial Average finished 93.47 points higher at 12,719.49, notching a seventh advance in eight sessions. The Standard & Poor’s 500-stock index rose 14 points to 1,353.22, while the Nasdaq Composite jumped 38.64 points to 2,872.66, just shy of the 2011 closing high of 2,873.54 on April 29. Investors were heartened by an estimate from payroll provider Automated Data Processing that private-sector jobs gained 157,000 in June, comfortably outstripping economists’ forecasts. Separate data showed that new claims for unemployment benefits fell by more than expected for the week ended July 2. Traders welcomed the contrast with months of weak employment data.
The European Central Bank convened today and decided to raise the Euro Area interest rate by 0.25 percent point from its current level of 1.25% to 1.5%. This is the second rate hike in 2011. One of the main reasons for this interest rate hike is related to the ongoing rising inflation rate: in June 2011 the annual inflation rate reached 2.7% in annual terms, which is above the ECB’s 2011 annual target inflation of 2%. Since Europe is facing financial risks including the debit crisis in Greece and Portugal, it’s likely that this recent raise might even raise the demand for gold, because the recent rate hike raises the cost of Euro and consequently the cost of the loans Greece and Portugal will need to payback.
Today’s Important Economic Announcements (GMT)
8:30 AM GBP PPI Input m/m
11:00 AM CAD Employment Change & Unemployment Rate
12:30 PM USD Non-Farm Employment Change & Unemployment Rate
2:00 PM USD Wholesale Inventories m/m
AUD/USD
The Australian dollar’s positive tone extended on Thursday as better-than-expected employment data fuelled bullish price action as well as stronger stocks and commodities seen during the American session. Bigger time frames show a positive momentum that will likely support further gains. Expect the pair to accelerate once above 1.0800 resistance area, although most likely after US employment data and not before. Surely global investors are fleeing to higher-yielding currencies such as the Aussie and the kiwi, which means further highs are expected.
Stop Loss: 1.0730
Take Profit: 1.0794
USD/JPY
The yen headed for a weekly drop against a majority of its most-traded peers before reports that economists said will show the U.S. added jobs for a ninth month and German exports rose, reducing demand for haven currencies. We’ve seen good news stories lapped up by traders this week, resulting in significant flow into higher-yielding currencies and keeping the yen on the back foot. If we saw a positive result in the non-farm payrolls report today, we could see an extension in the gains for riskier currencies. The Yen is headed for weekly decline before US Jobs data release. Our target is set at
Stop Loss: 81.06
Take Profit: 81.41
Dow Jones
Automatic Data Processing, Inc. released its assessment of job growth in the private sector of the United States. The numbers were released far greater than what many analysts had expected, indicating a boom in private employment growth across a nation befuddled by structural employment deficits. Fear that Congress will fail to lift the debt ceiling, sending the nation into a potential second collapse, has several economists worried that businesses will be reluctant to hire. We expect the positive sentiment on Wall Street to continue into the weekend.
Stop Loss: 12,630
Take Profit: 12,710
