The U.S stock market shredded its intraday gains yesterday as financial worries appeared yet again during the session. Morgan Stanley was the major culprit this time round, showing a quarterly loss, while cutting its dividend. On a day to day basis, further bad economic data and reports are being released, showing investors that the global economy has still got a far way to go until a complete recovery and that they shouldn’t become too optimistic.

In addition, the World Bank released a report yesterday stating that the global economy will continue to contract throughout 2009, but should begin to recover during 2010. Officials from the IMF stated that even though they are expecting things to improve towards the beginning of next year, economic growth will not be at its fullest and figures will probably come out below the bank’s target of 2%.

On the upside, not all large caps showed gloomy reports yesterday. McDonalds show a profit exceeding its estimates, while Apple’s sales jumped due to its increasing popularity of the iphone.


In addition, the U.S reported that the house price index had improved from January to February by 0.7%. The news was welcomed by investors as it showed that the battered housing sector could be finally starting to feel government’s efforts, to revive the sector.

Will Economic News Today Spark the Next Move?

Over on the Forex market the Dollar traded mixed yesterday as most of the pairs failed to present any significant moves. The Dollar index continued to trade around its recent resistance level of 87, but lost its strength during the session. As explained in previous reports, the Dollar index is currently trading around major trend line support. Should the index break support, individual pairs will be affected and will present significant moves.

The GBP/USD bounced higher during early hours today after coming down to test support of $1.4375. As mentioned in the dodjit video briefing, the markets are already pricing in the worst therefore if economic data from England continues to show a deteriorating economy, but it come out in line with expectations, then this pair could even rally higher. During yesterday’s session the U.K’S Chancellor stated that the British economy will more than likely continue to contract this year and could exceed their forecast of -1.25%. In addition he touched inflation stating that it will remain at low levels. Furthermore, he explained that the lower prices and the low value of the Pound could help exporters this year.

From a technical point of view the GBP/USD is now trading above support. Even though the price pattern dropped below its prior low, overall market strength could drive this pair higher. 


 

Gold Bugs are Now Confused

Gold has entered into a consolidation pattern over the last two weeks of trading as all traders, bullish and bearish ones now seem to be confused regarding future inflationary expectations. On one hand, recent monetary actions could spark inflationary pressures, yet on the other hand, inflation data is showing a moderate increase. To date Gold has formed a minor tight ranging pattern, with resistance located at $898.30 and support at 865.15. A break of lower support will confirm the continuation of the current secondary downtrend.

Market Date to Watch Out For

Economic data should spark major movement during today’s session as Europe is expected to flood the calendar with results. Germany is scheduled to take the stage first, releasing its Manufacturing PMI and Services PMI results. In addition the Euro zone will follow with the same data – All the results are currently expected to show a slight improvement compared to last month’s figures.

Furthermore Canada is scheduled to show how its retail sector is holding up, while the U.S will be releasing it’s widely watch existing home sales. After yesterday’s housing data, investors are hoping for a better than expected result, something that could back up yesterday’s pleasant housing price index result of 0.7%.

Market Pivot Points