Market Brief

[Tom]

It was a bull rally all the way for the stock markets around the world. All the major stock exchanges around the world, closed with gains. S&P 500 was up by 9.5 points and closed at 1848.38. Dow Jones Industrial Average was jumped by 108.08 points to close at 16,481.94 and Nasdaq Composite gained 31.87 points to close at 4212.88. U.S. stocks were up on positive economic data and higher profit reporting from Bank of America and rallying Apple shares.
European stocks performed very well too. Stoxx Europe 600 was up by 1% to close at 334.51 highest since January 2008. German DAX 30 was 2% up to close at 9733.81. French CAC 40 was up by 1.4% to 4332.07. UK’s FTSE 100 was 0.8% up to close at 6819.86. The stocks jumped on positive manufacturing data and optimistic global growth forecast by World Bank.

[Mick]

AUD - Unemployment Rate (Dec)

Jan 16 00:30 GMT

5.8% Consensus

5.8% Previous

The Unemployment Rate release by the Australian Bureau of Statistics is the number of unemployed workers divided by the total civilian labor force. If the rate hikes, indicates a lack of expansion within the Australian labor market. As a result, a rise leads to weaken the Australian economy.

A decrease of the figure is seen as positive (or bullish) for the AUD, while an increase is seen as negative (or bearish).


USD - consumer Price Index (Dec)

Jan 16 13:30 GMT

1.5% Consensus

1.2% Previous

The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation.

The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).


DATA EXPECTED - HIGH

[GoldTrader]

The Result AUD - Unemployment Rate (Dec) is UNCHANGED DATA RESULT,



So AUD expected no changed in unemployment data.

5.8% Actual

5.8% Consensus

5.8% Previous

[Syed]

Euro was steady against U.S. dollar on lack of major economic indicators and trading around 1.3556 in a tight range between session low 1.3535 and session high 1.3581. Both the currencies are faring well on positive global economic outlook by the IMF which predicted global growth at 3.7%. The support is seen at 1.3508 and resistance is seen at 1.3699.

Great Britain pound was mostly up against the U.S. dollar on positive employment data. The GBP touched session high of 1.6580, highest since 2^nd January on U.K. employment data that showed unemployment rate at 7.1%, the lowest since 1997. This could pave way for the Bank of England to have serious thoughts on raising the Interest Rate. The unemployment rate at 7.1% surpassed the forecast of 7.3%. Also, the jobless benefits claims reduced by 24,000 in numbers that shows the employment sector to be in good shape.

Bank of Canada kept the Interest Rate unchanged at 1% citing reasons that inflation is below the targeted 2% and may continue like this for some time to come. USD/CAD touched session high of 1.1064, 0.87% up, the highest in four years. The pair traded between session low of 1.0954 and high of 1.0171. The pair was likely to find support at 1.0930 and resistance at 1.1103.

AUD/USD touched session high of 0.8878, the pair's highest since January 16 on positive inflation data that showed the CPI increased to 2.7% from 2.2% and surpassing the 2.4% forecast. The pair consolidated at 0.8881, climbing up 0.85%. The pair is likely to find support at 0.8776 and resistance at 0.8971.

Gold remained mostly down on the Fed tapering fears. A report published in the Wall Street Journal suggested with certainty that FOMC (Federal Open Market Committee) will announce second round of tapering in its next meeting on 29^th January. Gold futures for February delivery traded at $1,239.80/ounce 0.16% down. The gold traded in the tight range on lack of major indicators between $1,237.90/ounce and $1,243.40/ounce.
Many believe that Fed will trim its bond buying program by another 10 billion dollar in its next meeting on 29^th January.

[Mick]

yes, I agree on your point of view on gold, if the fed trims another $10 billion from bond buying to $65 billion/month then USD will go crazy and gold being an anti-dollar will see new lows. Best of luck to the gold bugs

[Syed]

Gold prices jumped $20 per ounce on Thursday on weak China, U.S. data and news that India’s ruling party chief asked for the relief in the gold Import prices.
Gold February delivery contract jumped up 1.9% or $23.70 to $1,262.30/ounce on Comex, the highest since 19^th November 2013 and erasing losses from two consecutive sessions. India’s ruling congress party Chief Mrs. Sonia Gandhi reportedly asked government for relief on gold import duties as India maintains very high duties on gold to discourage import, which is believed to have cause huge trade deficits. With the trade deficit gap narrowing recently, import duty on gold is being considered again. The very hefty import duty has encouraged smuggling which can cause serious economic imbalance.
If this news materializes into reality and the import duty is lowered, then very huge demand is expected from India to fill the vacuum created by huge import duties. India has been the World’s largest gold importer traditionally.
Also, data released from U.S. was not very positive overall, if not completely negative. There has been a slight increase in the jobless benefits claims by 1000 in number to 326,000 claims, actually lower than the forecasted figures. The existing home sales data showed a growth of around 1%. However, the continuing jobless claims increased by 34,000 in numbers to 3,056,000 and the Leading indicators figure turned negative to 0.1% from 1% missing the 2% forecast. The weakness in the U.S. data was reflected in the equities and the dollar which in turn strengthened the euro and gold.
Weak manufacturing data from china affected the equities adversely. HSBC Markit Flash Manufacturing Purchasing Managers Index (PMI) for the month of January fell to 49.6 from 50.5 indicating slowdown in the manufacturing sector. Concerns over China and strong PMI data from Eurozone weighed on the stocks and dollar fueling the gold prices in the process which rocketed more than $20 an ounce.
Euro gained on weak U.S., China data and strong manufacturing data from Eurozone. The French, German and Eurozone Manufacturing Purchasing Managers Index (PMI) were all in green posting gains. EUR/USD was trading at 1.3678, up 0.96, up from a session low of 1.3531 and touched 1.3685, the session high. Euro is likely to find support at 1.3531 and resistance at 1.3699.
U.S. Stock Markets were all down on Thursday on weak U.S. data with Dow Jones being the biggest loser of the day with 1.08% loss falling 176 points to 16,197. Dow was followed by S&P 500 which posted 0.91% loss and losing 17 points to close at 1,828. Nasdaq Composite suffered 0.57% loss losing 24 points to close at 4,219.

[Syed]

U.S. stocks improved today on positive earnings reports and upbeat Consumer Confidence figure. Drug giant, Pfizer reported positive earnings at 2.3% and D.R.Hortan inc. also beat the forecast in earnings. Also, data released today from U.S. showed that the Consumer Confidence has improved to 80.7 from 77.5 beating the forecast of 78.0. S&P 500 recovered from the worst slump in last three months and jumped 0.59% to 1792 around 2.47 pm EST.
The ICE dollar index turned higher from 80.498 to 80.58 indicating strength in the U.S. dollar.
The U.S. dollar against Japanese Yen touched 103.25 the session high before consolidating to 102.86, up from day’s low of 102.50.
The Euro was trading at 1.3667 down from day’s high of 1.3688 and up from session low of 1.3630.
The Australian dollar gained against the U.S. dollar. The AUD/USD traded at 0.8775 up from session low of .8728. The pair touched session high of .8821.
FOMC is currently undergoing a two day meeting and the result of the discussions will be announced tomorrow on Wednesday. Most of the analysts forecast that, the Fed will announce further cuts in the monthly bond buying program by another 10 billion dollar. The monthly bond buying program also called quantitative easing has been the Fed’s weapon of choice for reviving the economy and to provide the necessary stimulus. However, QE3 as it is called, affected the dollar negatively, depreciating its value. With the fed on track of reducing the QE3 and finally stop it, U.S. dollar is revived.
Elsewhere, in the emerging markets, Turkey’s Central bank Governor warned that the rate of inflation has increased above their target which is at 5% and the expectation for the year end inflation is raised to 6.6%. Also, the governor informed that, he will use all the monetary tools at his disposal to stop the month long decline in Turkish Lira and contain the raising inflation. The Reserve Bank of India raised its interest rate against expectation in a surprise move to support the falling Indian Rupee. The RBI has increased the Interest Repo Rate by 0.25% to 8.0% and informed that immediate tightening is unlikely in the near future. INR is suffering from higher inflation and lack of Foreign Investment amid suffering policy errors and corruption.

[Syed]

U.S. stock markets extend losses in Wednesday’s session on emerging market fears and Fed’s tapering decision.
Dow Jones Industrial Average was the most affected index which dropped 1.19% or 190 points to close at 15,739. Nasdaq Composite lost 47 points or 1.15% to close at 4,051. S&P 500 lost 19 points dropping 1.03% to close at 1,774.
With the conclusion of a two day meeting, Federal Reserve Open Market Committee chairperson, Ben Bernanke, announced continuation of tapering in monthly bond buying program by another 10 billion dollar to $65 billion/month from $75 billion dollar. Also, the long term Interest Rate has been kept all-time low at 0.25%. The Fed hinted that the overall economic growth is satisfactory and the labor market is catching up with the expectation. The Fed’s decision to cut the monthly bond purchase program has been already predicted and was expected by the leading economists, however, some hoped that the emerging market fears and the declining stock markets coupled with some weak economic indicators in the recent weeks may induce Fed to continue with its current bond purchasing program. With Fed on track to reduce the Quantitative Easing and stop it altogether by the end of the year, market is afraid the easy money won’t be available in future.
Also, emerging market fear is spooking the stocks that worry of a contagion. Recently Turkey, India and South Africa raised their interest rates to stop the sharp decline in their respective currencies. Even with a sharp rise in Interest Rate, the Turkish lira extended declines against U.S. dollar today.

U.S. Dollar index was down on Wednesday at 80.53, dropping 0.17%. Dollar dropped most against the Japanese Yen which acquired the safe haven status due to turmoil in the stocks. USD/JPY traded at 102.11 dropping 0.8%. The pair touched the 103.25 in Tuesday’s session.
Swiss Franc also weighed down the U.S. Dollar as safe asset class. USD/CHF was trading at 0.8946 down 0.30%. EUR/USD closed low t 1.3657 down 0.10%. GBP/USD was down 0.10% too and closed at 1.6564. The Australian Dollar against U.S. Dollar closed low too at 0.8738, dropping 0.46%.
Some time back I posted an article titled “Gold playing Seesaw” on my Company’s FB page and that is what it is happening with Gold prices right now. Gold prices touched $1276.80/ounce on Monday, the highest in past 10 weeks and then dropped on Tuesday touching session low of $1249/ounce and today on Thursday the Gold price is up again at $1,266.80/ounce. So gold is up one day and down the other day. Gold April delivery contract traded at $1262.60/ounce climbing 0.97%. The Gold faces major resistance at $1279.20/ounce and finds support at $1231.30/ounce. The emerging market fear has spooked the stocks and investors are running for safer options as Gold the Yen and Swiss Franc.

[Syed]

Thursday proved to be the best day in weeks for the stocks. Strong economic growth in the last quarter of the year 2013 and positive earnings report from tech giants helped stocks rally with Nasdaq Composite at its highest since 10^th October 2013. Data released from U.S. showed that the economic growth in the final quarter of the year was most strong. The data showed that the GDP was 3.2% in the fourth quarter and in line with the expectation and consumer spending rose by 3.3% the strongest since Dec 2010. Another set of data showed that the unemployment claims has increased in last week by 19,000.
The tech stocks rallied following the rise in Facebook, Twitter, LinkedIn and Google shares. Dow Jones Industrial Average gained 109.83 points jumping 0.70% to close at 15,848.61. Nasdaq Composite gained the most, gaining 71.69 points and jumping 1.77% to close at 4,123.13. S&P 500 jumped 1.13% and gained 19.99 points to close at 1794.19.

U.S. Dollar gained on the strong economic data today. The dollar index, which tracks the performance of U.S. Dollar against six other major currencies, was up 0.73% at 81.21. The data showed that the GDP was 3.2% in the fourth quarter and in line with the expectation and consumer spending rose by 3.3% the strongest since Dec 2010. Another set of data showed that the unemployment claims has increased in last week by 19,000.
On Thursday the Fed decided to cut its monthly bond buying program from $75 billion U.S. Dollar to $65 billion U.S. Dollar. The bond buying program started in the ending of 2012 with a monthly $85 billion U.S. Dollar budget provided the necessary stimulus to the economy. With the economy on track to recovery the program is slowly tapering off.
The U.S. Dollar was up against the major rivals today. The dollar rallied against Japanese Yen with USD/JPY at 102.76 up 0.48%. The Swiss Franc was down against U.S. Dollar with USD/CHF at 0.9036 up 1.02%. The U.S. Dollar was up against the British Pound too with GBP/USD down by 0.54% at 1.6475.

The Gold prices buckled on Thursday with release of strong economic data that showed the growth in the last quarter of 2013 at 3.2% and upbeat Consumer Spending at 3.3%. Gold April delivery traded at $1243.50/ounce down 1.48% from session high of $1269.90/ounce. The Fed tapering news weighed on the Gold prices. With rallying stocks the attention from Gold was diverted and the physical buying from china cooled too.

[Syed]

Stocks:
U.S. stocks closed the Tuesday’s session on a high note, recovering from previous session’s steep losses. Data released on Monday showed that the ISM Purchasing Managers Index figure dropped beyond forecast, triggering a massive selloff in the stocks which saw the major indexes dropping to their lowest since June 2013. Dow Jones Industrial Average Index was the worst performer losing more than 300 points. The ISM Purchasing Managers Index figure dropped to 51.3 in January from 57.0 in December.
However, the investors were more positive on Tuesday, encouraged by smaller than expected loss in Factory Order Figures that came in at -1.5%, which is less than the forecasted figure of -1.8%. Investors associated Monday’s negative ISM figure with the bad weather conditions in most of U.S., which may change with improvement in the severe weather conditions.
The S&P 500 gained 13.31 points or 0.8% after dropping 2.3% in the previous session. The index closed at 1,755.20. The Dow Jones Industrial Average index which dropped 326 points in the previous session, regained some of the losses today. The Dow Jones index rose 72.44 points or 0.5% to close at 14,445.24. The Nasdaq Composite gained 34.56 points rising 0.9% to close at 4,031.52.

Currencies:
U.S. Dollar improved on Tuesday following a major drop in previous session on bad ISM Purchasing Managers Index figures which dropped to 51.3 in January from 57.0 in December the fastest in more than 30 years. However, the investors attributed the Monday’s negative data on worst weather conditions. The ICE U.S. Dollar Index, which measures Dollar’s strength against six rival currencies, rose 0.13% to 81.23.
The U.S. Dollar was up against its rival Euro with the EUR/USD pair trading at 1.3516, down 0.09%. The Dollar was up against the Japanese Yen, which attained the safe haven status following the slump in stocks. The USD/JPY pair traded at 101.65 up 0.66%. USD/JPY pair dropped to 100.92 in the previous session. The U.S. Dollar gained against Swiss Franc, another safe haven currency. The USD/CHF pair rose to 0.9402 gaining 0.38%
Pound traded higher than U.S. Dollar. GBP/USD pair was up 0.12% at 1.6324. Also, the neighbor, Canadian Dollar was up against its U.S. counterpart with USD/CAD pair down 0.43% at 1.1070. The Aussie traded higher too. The AUD/USD pair was up 2.11% at 0.8936 on the news that the Reserve Bank of Australia refrained from easing the Interest Rate.

Commodities:
Gold prices eased on Tuesday following gains in the U.S. stocks and Dollar. The Gold prices rallied on Monday following bad ISM Purchasing Managers Index figures which dropped from 57.0 in December to 51.3 in January, prompting investors to seek Gold’s safe haven refuge. Investors are keeping a keen eye on the data coming out of U.S. which predicts the overall economic health and Fed’s future decisions on monetary policies. Negative ISM PMI figures released on Monday caused a major selloff in stocks on assumption that the fed may delay its tapering on the monthly bond buying program. However, with the release of better than expected factory Orders figures on Tuesday, investors turned more optimistic and blamed worst weather conditions on Monday’s bad economic data. This drew the attention of investors away from Gold back to stocks. The April delivery gold contracts traded at $1253.30/ounce, 0.52% down from the session high of $1260.80/ounce. The session low was $1247.20/ounce.
The Oil prices turned higher on Tuesday with release of better than expected U.S. Factory Orders data and weather forecast that more winter chills and polar winds are expected to continue for some more time. The major parts of U.S. are affected by the severe weather conditions that pushed the Gas prices higher, which is predominantly used for home heating purpose.
Oil prices took beating on Monday on bad ISM PMI figures that show a major drop in the purchasing and manufacturing sectors. However, with the release of better than expected U.S. factory orders data that decreased to -1.5%, which is much less than the forecasted figure of -1.8%, optimism returned back. Also, the American Petroleum Institute informed that the Oil supplies has increased to 384,000 barrels in past week. April delivery contract for WTI crude oil traded at $97.67/barrel, up 0.48% and touched session high of $97.85/barrel. The UK Brent March delivery contract rose to $106.06/barrel, up 0.10%.