MORNING BRIEFING: Bernanke’s testimony triggers markets risk aversion

[RTFX-Trading]

MORNING BRIEFING: Bernanke’s testimony triggers markets risk aversion  

What’s new:
United States: Bernanke testimony to congress triggers pessimism
Equity Indices: Asian indices mostly in the red, even European open follows suite
JPY: Finds increased support on renewed risk aversion
Global: New Zealand & Australia’s confidence levels fall
European Union: Stress tests might be anticipated to morning rather than late afternoon
EuroZone: Poorly concluded Portuguese T-Bill auction drags Euro lower

Today:


Rates in Asia and Indices:
EURUSD: 1.2793 - 1.2737.
USDCHF: 1.0516 - 1.0463.
GBPUSD: 1.5198- 1.5151.
EURJPY: 111.14 – 110.02.
USDJPY: 87.09 – 86.34.
DowJones: 10’120.53 -1.07%
NASDAQ: 2'187.33 -1.58%
S & P 500: 1'069.59 -1.28%
Nikkei: 9’220.88 -0.62%
Shanghai: 2'560.23 +0.98%
Gold: $ 1'182.60
Crude Oil: $ 76.38

 
Comments:

Despite Fed Chairman Ben Bernanke’s semi-annual report to congress yesterday, was very much in line with previous speeches, investors interpreted his words as bearish on economic outlook.  Mr Bernanke described an unusually uncertain economic outlook and he said that while the Central bank continues with its withdrawal of extraordinary monetary accommodation they shall remain ‘prepared to take further policy actions as needed’.

Asian stocks reflected this bearishness, although losses were very much contained. Even European stock index futures were pointing to a lower open this morning, as they are still set to react to Bernanke’s report.

 The Japanese Yen gained a 0.43% against it major counterparts due to this renewed risk aversion. A drop in New Zealand Consumer Confidence and Australia’s Business Confidence gave rise to further pessimism as well.

Stress tests are due tomorrow - The ‘Wall street Journal’ reports that some EU regulators are keen to publish the results prior to European open on Friday, rather than later in the afternoon as was originally scheduled.

A poorly concluded Portuguese T-Bill auction, dragged the Euro lower yesterday, and has been trading between 1.2737 to 1.2786 this morning. RTFX TraderTip’s outlook for the EUR/USD today finds support at 1.2682 should be tested but is expected to hold, after which there is a possibility the pair could go up back to 1.2867, which is also the first resistance.

Good day,


Rudolf Muscat
Trading desk

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