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| Daily Market Review July 8th, 2009 Posted: 08 Jul 2009 01:14 AM PDT PPIP – sounds like some type of Morse code, no? After clinging on to major support levels yesterday, the S&P500 along with other indices tumbled over, to close the session with an average loss of 2%. The selling pressure occurred following President Barak Obama’s comments mentioning that another stimulus package could not be ruled out. The news immediately spooked investors knowing that further stimulus means further debt for the U.S economy. In today’s market, the imbalance between government’s debts has reached such an extreme that countries with surpluses are now concerned that the U.S government will not be able to repay borrowed money. With a current debt reaching approximately $11.7 trillion, many are worried that another stimulus will put extreme pressure on the U.S, something that could lead to further problems in the long term. In addition the U.S government released its PPIP program (Public-Private Investment Plan) yesterday, another plan which derives from the TARP program to help clear the toxic off bank’s balance sheets. The plan is designed to value and remove troubled assets, with the help of private investors and the U.S government. When taking a glance at the Dow’s intraday chart, one can see that the price broke the range, throughout the session due to the news and dropped to close just off its lows of the day. From a technical point of view, the MACD is presenting slight divergence, which could lead to a mild bounce, but with yesterday’s close below the 200 moving average, the move could be limited to only a minor climb.
USD/JPY approaching support Economic data continued to have its usual affect on the intraday session, slinging the various currency pairs back and forth. The Dollar index showed strength yesterday as a gloomy economic outlook sent investor back into this safe-haven. Even thought the intraday rally was limited the index managed to climb, and close above 80 points. One must note that the index is continuing to range, and is still trading below resistance of 81.41. On individual Forex pairs, the Pound lost further strength to the Dollar, while the USD/JPY dropped, following the selling pressure on stocks. Even though the National consumer confidence result released from England, showed an increase to 58.20 points, Manufacturing and Industrial Production both showed a further slowdown in the economy, depressing any intraday strength on the GBP crosses. Both the numbers came out negative, after showing that the sectors were beginning to regain partial strength. Data also had an influence on the USD/JPY yesterday as Japan showed that its Bank Lending and Current Account had both decreased. Even though many thought that the news was going to be negative for the Yen, the USD/JPY weakened as the results showed investors that the U.S problems are still affecting foreign countries. Investors preferred to cash in on this carry trade during yesterday’s session, on speculation that further problems could be negative for all carry trades. From a technical point of view the pair is now approaching major support, one that could present a possible long position, considering that the pair stabilizes and presents a reversal pattern.
Market Data to Watch Out For The U.S will step aside today, releasing only its crude oil inventories and consumer credit. The U.K is scheduled to release its closely watched Halifax House Price Index, a number that should show a further slowdown in the sector. In addition the Euro-zone will release its GDP numbers, showing further contraction. Later on during the session Australia will release its unemployment rate and change. The numbers are expected to show an increase in job losses and their unemployment rate is currently expected to reach 5.9%. Related posts:
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