Market Commentary 24/07/09
Key Themes
The main themes deciding market direction currently are: -
Increasing risk appetite is continuing to push investors away from the safe haven of USD and JPY.
MPC View that downside risks to growth have diminished.
Decision by BoE to hold Quantative easing at current level £125bn.
Short term positive sentiment on the back of economic data.
In the News
Positive news for equities as the FTSE 100 passed the 4500 level and the Dow closed above 9000.
Retail sales figures came in better than forecast, which has led to hopes of a potential positive upturn in the economy. High street sales rose by 1.2% in June ahead of analysts’ forecasts of a 0.3%rise.
Thursday Technical Trading
GBPUSD – Volatile range trading ended with the pair still holding above 1.6500
EURGBP – Positive GBP moves saw a break below 0.86 although this is struggling to hold.
GBPCHF – Broke above resistance and held above at 1.7700
GBPJPY – Continuing strength along with JP weakness is seeing the pair hold above support at 156.50
EURUSD – Strong trading in the early US session led to the pair closing the reaching a high of 1.4291. These gains were more than given back in the late US session when in volatile trading it recorded a low of 1.4118
Data released today
Friday 24th July
9.00am EUR German Ifo Business Climate (Forecast at 86.6)
Measures - Level of a composite index based on surveyed manufacturers, builders, wholesalers, and retailers
Why Note – This survey is highly respected due to its large sample size and historic correlation with German and wider Eurozone economic conditions. It tends to create a hefty market impact upon release
Usual Effect - If the actual number is higher than forecast then this is seen as good sign for EUR
9.30am GBP Preliminary GDP (Forecast at -0.3%)
Measures – Change in the inflation-adjusted value of all goods and services produced by the economy
Why Note – It’s the broadest measure of economic activity and the primary gauge of the economy’s health
Usual Effect – If the actual number is higher than forecast then this is seen as good sign for GBP
3.30 pm USD Fed Reserve Chairman Testifies
Usual Effect – If views expressed are more hawkish than expected this is seen as a good for USD
Market Sentiment and Consensus
EURUSD
This week – expected higher as long as it doesn’t trade below 1.3963
Today – expected to trade in the range of 1.4135 to 1.4214
GBPUSD
This week – expected flat in the range of 1.6222 to 1.6481.
Today – expected to trade in the range of 1.6455 to 1.6537
EURGBP
This week – expected higher as long as it doesn’t trade below 0.8535
Today – expected higher as long as it doesn’t trade below 0.8570
