E-toro Market Review Dec 18
Americas
*Canadian CPI higher than expected at 1.0% annualized
*Canadian Core CPI higher than expected at 1.5% annualized
*US Initial Jobless Claims worse than forecasted at 480K
*US Continuing Jobless Claims better than forecasted at 5186K
*US Philadelphia Fed Manufacturing Survey surprised for the better at 20.4
Europe
*UK Retail Sales surprised for the worst at -0.3% MoM
*UK CBI Distributive Trades better than expected at 13
*Swiss ZEW Economic Expectations down to 54 from a previous 56.4
Asia-Pacific
*New Zealand Business Confidence down to 38.5 from a previous 43.4
*Japanese Leading Economic Index up to 89.4 from 87.5
The Overall Sentiment
Forex
The Dollar strongly advanced across the board after the Fed left rates unchanged yesterday but outlined the conclusion of most of its emergency measures by February 2010. EUR/USD reached its lowest level in three months at 1.43. Commodity-linked currencies retreated as investors abandon high-yielders and look for the Dollar and Yen’s safe-haven status. The Australian dollar extended losses below 0.89 against its US counterpart and USD/CAD climbed to the 1.07 level. The Pound dropped on disappointing Retail Sales numbers, with an intraday visit underneath 1.61 against its US peer. The Yen gained versus all majors with USD/JPY still battling around the 90 level.
Equities
US stock markets dropped driven by losses from Citigroup, which sold shares at a discount, and negative sentiment from an increase in Initial Jobless Claims. Yesterday’s hawkish rhetoric from the Fed has also prompted investors to sell equities and turn to the Dollar for safety. At 20:00 GMT, the S&P was down by 0.8% and the Dow had lost 1%. In Europe, the British FTSE 100 dropped 1.9%, its biggest decline in three weeks, as the UK Retail Sales surprisingly fell 0.3% in November. The downgrading of Greece’s credit rating continues to weigh on European markets and financial institutions. The DAX declined 1%, led by losses from Germany’s largest banks.
Commodities
Gold plummeted below $1100 as the Dollar’s strength and the prospects of closer-than-expected rate hikes diminished the demand for the yellow metal. Silver dropped as well, approaching the $17 level. Crude Oil retreated in early trading hours after yesterday’s rally but recovered to sustain trading around $72.50.
The Day Ahead
The day will start with Bank of Japan’s rate decision at the end of a two-day policy meeting, for which market expectations are pointing to an unchanged 0.10% as deflation continues to loom over Japanese economy. Moving to the European session, German PPI is expected to show a 0.2% rise for November, and positive figures are forecasted for both the IFO Expectations and Business Climate, anticipating positive sentiment in the Euro-zone for the short-term. UK Public Sector Net Borrowing and the EU Trade Balance are also due for release. Canada Wholesale Sales is estimated to show a 0.3% increase for October in the only economic piece of data coming for the Americas.
