MORNING BRIEFING: Mixed market sentiment

[RTFX-Trading]

MORNING BRIEFING: Mixed market sentiment

What’s new:
US Dollar: Dollar index up for fourth consecutive day
Asia: Major equity indices stronger
Euro zone: EU and IMF meetings in Greece take place today
United States: positive on good earnings reports
Japan: BOJ says deflation improving

Today:



Overnight Rates and Indices:
EURUSD: 1.3447 – 1.3398.
USDCHF: 1.0711 – 1.0666.
GBPUSD: 1.5412 – 1.5332.
EURJPY: 125.52 – 124.64.
USDJPY: 93.38 – 92.97.
DowJones: 11’117.06 +0.23%
NASDAQ: 2’500.31 +0.81%
S&P 500: 1’207.17 +0.81%
Nikkei: 11’090.05 +1.74%.
Shanghai: 3’033.27 +1.8%,
Gold: $1’143.80
Crude Oil: $84.32
 
Comments:

USD strengthened against euro in Asia despite stronger equities and the absence of any major news. The US Dollar index advanced for the fourth consecutive day, as investor sentiment and appetite for risk still seem to be quite mixed.   

Even market signals for risk are contrasting each other; Dow advanced (although moderately), companies like Yahoo, apple, coca cola, Johnson & Johnson and even Goldman Sachs  are reporting improvement in earnings, some central banks, like RBA, BOC and the Indian Monetary authority – are hinting if not already boosting their rates. However on the other side of the coin yield differentials on Greek debt are hitting new records, China is manifesting various attempts to cool down its overheating economy – it seems china’s economy will at least cool if not worst.

It seems that market direction at the end of the day is the net effect of all these ongoing signals, sometimes the net result is for risk appetite and somedays its for the opposite.

Euro is completely dominated by Greek events talks between EU and IMF take place today, and according to Greek Finance Minister these are expected to take at least ten days. If crisis is not settled recession and default become probable threats.

As fiscal difficulties in Euro zone still seem prominent, we will probably see further dollar strength, supported also by what seems to be the Fed’s intention to gradually proceed to policy normalization.

Today important data for UK employment and BOE MPC Minutes are expected. In all probability British pound should remain in demand in a risk seeking environment.

In Japan BOJ Deputy Governor Nishimura noted that the issue of deflation seems to be improving, backed by some positive signs that Japan is in the process of escaping deflation.

Good Day.


Rudolf Muscat
Trading desk

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