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Is President Obama Losing His Charm on the Markets?
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Is President Obama Losing his Charm on the Markets?
Yesterday’s U.S stock session was characterized by additional selling pressure as economic data had more of an influence on the session, than positive words from the U.S president. The closely watched Beige Book showed that certain parts of the economy are beginning to improve, but consumer spending hasn’t yet picked up; something that could weigh on the future recovery.
While parts of the report were positive, they didn’t impress investors, sending them back into safe-haven. In addition, the Durable Goods figure showed a massive drop, coming out at -2.5%, compared to last month’s -0.6%. Even though the core result showed a mild increase, the total value of new orders for durable goods dropped severely, showing that the U.S economy is still in a problematic situation.
On the upside President Barack Obama stated at a town-hall meeting in North Carolina that the U.S could be starting to see the end of a 19 month recession. Even though the unemployment level is still in a dire situation, the president did mention that the financial system has now avoided a major collapse and that home prices have increased for the first time in three years. While the President gave an optimistic speech he did also state that the U.S economy is far full recovery and further efforts could be required to restore healthy economic growth.
Stocks traders looked past the encouraging speech, troubled by the size of the current deficit. The stock market took another hit closing the session with an average loss of 0.5%. The energy sector felt the most pressure, dropping throughout the session by -2.31%.
Dollar strengthens, How far will it rise?
With the U.S stock market recently presenting stagnant sessions, investors have now rushed back into the Dollar safe-haven. As stated on yesterday’s report the Dollar index found support around its prior low, climbing throughout the session. Individual currency pairs such as the USD/CAD also found support showing an identical chart pattern. Even thought the Dollar could present a mild rebound in the short term, one must note that the major trend of the Dollar is still a downtrend; therefore resistance levels should be taken into consideration. On the following chart one can see that even though yesterday’s session presented a major reversal candle, resistance levels could limit the move.
On individual Forex pairs, the EUR/USD, GBP/USD and AUD/USD all headed back into range, despite signs of a recent break-out. The NZD/USD also presented a volatile session as New-Zealand’s bank governor stated that further monetary easing could be used in the future, despite an improving economy.
Over the last couple of months the NZD/USD has experienced an enormous rally, as the NZD has increased dramatically against the U.S Dollar. A global recession characterized by downbeat consumption hasn’t been positive on the New-Zealand economy, as a major part of their income comes from their exports. In addition, the recent NZD strength is putting additional pressure on their exports, depressing foreign consumption.
To date the NZD/USD is trading around resistance, within recent range. Even though the NZD/USD could lose further strength, strength on Dollar counterparts could pull this pair higher.
Market Data to Watch Out For
Even though a wave of economic data is scheduled to be released today, including unemployment data from Germany and consumer confidence from the U.K, today’s session could yet again present a lackluster session characterized by high volatility. Most traders will be preparing for tomorrow’s session as Europe is scheduled to release its CPI figure and the U.S will show how its economy held up in the second quarter, releasing its GDP figure.
To view the full economic calendar click here.
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Comments(2)
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The appropriate start date for measuring the impact of Leftist control over the Executive is not the inauguration. It was certain that a Leftist would control the Executive well before the November election. Propose a starting measurement date of about a year ago, when it became clear that Obama would be elected. Despite the recent bear market rally, U.S. equities are still down 30% from July 2008.
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Averaging so many markets is not all that informative. I'd like to see the charts for each presidential term, since those would show the actual market performances.
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