MIDDAY SNAPSHOT & ANALYSIS OF SELECTED MARKETS
Risk sentiment had been damaged in the overnight session but was able to recover somewhat, with the batch of US data helping to bolster currencies against the USD and Yen. US CPI was a tad firmer than expected, while empire manufacturing, TIC Flows, industrial production and Reuters/UMich confidence were all better than consensus estimates. Fed Fisher was on the wires earlier saying that Fed actions had brought the economy back from the “abyss.” However Fisher did express concern over the dramatic expansion of the Fed balance sheet and oversized federal budget deficit. Fisher went on to stress that no one at the Fed is interested in maintaining its current posture for “any longer and to any degree greater than is minimally necessary.” Fed Stern was also making headlines after adding that the economy is nearing the bottom. Stern however did warn that any recovery would be subdued. Elsewhere, in Canada, manufacturing shipments were much weaker than expected after coming in at -2.7% versus expectations for a +1.0% reading. All major US indices trade flat to lower. On the commodity front, gold trades higher by over 1.0% to fresh weekly highs, while oil moves in the opposite direction, down some 0.50%.
ANALYSIS OF SELECTED MARKETS
NASDAQ: Nothing too exciting to write about on the currency side this afternoon so we will defer to equity prices for a potential indication of future direction. Since bottoming in March, the Nasdaq has managed to put in 9 consecutive positive closes and higher highs, before finally stalling out in the current week. A combination of the inability to set a fresh higher high, a negative close and break of a sequence of consecutive higher lows could now be warning of a potential reversal which would also be suggestive of elevated risk aversion within the broader global macro markets. From a currency standpoint this would likely translate into a resurgence is USD demand as traders flock back into the safety trade. We would however need to see a negative weekly close and break below the 1664 (weekly low) to confirm bearish outlook.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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