The dominant theme in markets continues to be about growth and the Taper. Data and comments over the past 24 hours have added significantly to this debate insofar as we saw a very solid 6 month high in the HSBC Chinese manufacturing PMI but and undershoot of expectations of French, German and US PMI data.
Manufacturing PMI’s in France (49.5 v 49.7 last), Germany (51.3 v 51.8 last) and the US (52.8 v 53.1 last) were very disappointing but at least the German and US results were still positive in terms of Expansion. Service PMI’s were stronger however in Europe and the Composite PMI for the EU climbed to 52.1 which is a 27 month high.
On the Taper we heard from a few important Fed speakers. Dallas Fed boss Richard Fisher said that he thought the Fed should have tapered because it had signalled its intention and shouldn’t lose credibility. But he lost that argument last week and the more important comments are those we heard from Bill Dudley of New York who said “The economy still needs the support of a very accommodative monetary policy” and Dennis Lockhart of Atlanta who said the economy is losing some steam.
But it seems the talk is also about the looming US budget discussions and debt ceiling debate and the impact that might have on the economy.
So at the close the Dow was down 0.32%, the Nasdaq lost 0.26% and the S&P 500 was off 8 points or 0.46%% to 1702
In Europe stocks were also lower with the FTSE down 0.60%, the Dax off 0.47% and the CAC down 0.75%. Stocks in Milan and Madrid fell 0.32% and 0.67% respectively
[B]S&P 500 finds support at fast ma - needs to hold[/B]
Yesterday we noted that the S&P was likely to test support at the fast moving average and overnight it did and found support there. On much shorter time frames we usually see a few bars around the fast ma and then either a bounce or a break. So it is too early to tell yet but last nights low bears watching in the days ahead.
[B]Same story for the SPI 200[/B]
The SPI200 and the ASX is clearly being lead by global moves at present and as you can see in the chart below the SPI200 like the S&P found support aat the fast moving average. Yesterday’s low remains the level to watch.
On FX markets the Aussie dollar (0.9443 +0.85%) was the only material gainer buoyed by the HSBC Chinese PMI. Euro (1.3496) lost 0.36%, while the Yen (USDJPY 98.80) gained the same amount. GBP was marginally higher at 1.6049
[B]Australian dollar – can it surprise? [/B]
I’ve had a quick look at the Aussie Dollar over at Business Insider this morning based on yesterday’s Chinese PMI and the relationship between the Aussie and the BRICs Citibank Economic Surprise index – you can find it here.
The essential premise I guess is that there just might be a chance for the Aussie to climb a wall of worry while no one is looking. The weekly charts certainly suggest there is more strength coming – it just has to clear last week’s high and the slow moving average and it is off to the races.
There is a good 100-150 rally if last week’s high can be taken out and then we’ll see how the Aussie looks after that.
On Commodity markets Oil continues its retracement losing another 1.18% to $103.51 Bbl. Gold sits at $1322 oz., Silver at $21.70 oz. and Copper at $3.31 lb. On the Ags Corn was up 0.55%, Wheat rose 1.20% and Soybeans fell 0.63%
On the data front today German IFO business Climeate, Current and expectations is the main release with nothing of note in Asia. Case Shiller in the US tonight will be interesting and then we have another bevy of Fed speakers with Pianalto and George both speaking.
[B]Greg McKenna, Vantage FX Currency Analyst[/B]
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