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| Posted: 17 Jun 2009 03:33 AM PDT On The 200 Day Moving Average The U.S stock market continued to freefall during yesterday’s session, erasing additional gains. Even though economic data showed an impressive situation, it didn’t help, as bears overpowered the bulls during the session, sending the major indices plummeting. The S&P500 opened flat at the start of the session but quickly broke range, dropping to close with a loss of -1.27%. One must note that the S&P500 is now trading on a critical level, after finding support on its 200 day moving average. From a technical point of view, support could last today if fundamental backs the bull’s expectations of a bounce off current levels.
Economic data continued to affect market sentiment during yesterday’s session as housing starts showed a massive increase, coming out at 17.2. The figure astonished most investors, especially as the previous result showed a negative one. The PPI figure also depressed inflationary fears, as the yearly figure showed a negative -5%, while the monthly figure came out lower than expected at 0.2%. The negative momentum continued Wednesday morning as the Asian markets opened down, followed by a negative open in Europe. Even though the STOXX50 dropped at the start of the session, the selling pressure was capped by yesterday’s ZEW Economic Sentiment result, showing that the sentiment in the largest European economy (Germany) could have shown a bottom. The result came out at 44 points, exceeding analyst’s expectations of 35 points. Dollar Doom? Over the last couple of days the Dollar has been tip toeing on a thin line as BRIC countries have been questioning its future as a reserve currency. While certain members are extremely disappointed with the current value of the Dollar, partly caused due the U.S’s enormous deficit, others are still defending the greenback, mentioning that its status will not be affected. One must note that many metals are still traded in U.S Dollars; therefore oil exporting countries are being affected by the Dollar’s devaluation. While there have been a lot of discussions regarding the U.S Dollar, actions are yet to be take. In most cases, diversifying the world’s currency is easier said than done. Consequentially the Dollar index has been treading water over the last couple of days, after hitting resistance of 81.30 points. To date the price pattern has formed a bullish triangle in a down trend. While a breakout is often seen to the upside in this type of pattern, additional pressure could be felt on the Greenback, leading it to its recent lows.
On individual pairs the EUR/USD managed to find support early morning regaining Monday’s losses, while the GBP/USD continues to remain around recent highs. The U.K is expected to release its ILO unemployment rate shortly, showing that the economy’s job loss rate has increased to a whopping 7.3%. In addition Initial claims will show an increase and is expected to come out at 60.0k. Economic Data to Watch Out For Even though England is scheduled to release data shortly, investors will focus on the economic data coming out from the U.S later today. The consumer price index is expected to show another monthly decline while the yearly result is expected to come out below the fed’s toleration rate of 2%. In addition Fed Chairman Ben Bernanke is expected to give his comments regarding the economic outlook. Related posts:
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