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The U.S markets raced forward yesterday after a mixed start, as economic data and an oversold correction, encouraged investors back into stocks. Pending home sales was the driver of the session, hitting analyst’s expectations of 1%. This was following last month’s drop of -16.4% after surging for months, as buyers rushed to take advantage of an $8000 tax credit for first time buyers.
Minor movement on the Forex Market
On the Forex market the Dollar index dropped lower and finished the session with a -0.21% loss. To date, the Dollar is trading within a bullish trend, but has started to present a technical correction. Even though during the start of a new cycle, the Dollar index will often trade correlated to equities, odd bullish days will tend to have a negative effect on the U.S Dollar, as investors seek riskier assets. On the chart below, the Fibonacci retracement levels have been plotted.
On individual pairs the GBP/USD bounced off major support after the U.K’s nationwide consumer confidence and the construction PMI both came out better than expected. The PMI result which measures the activity level of purchasing managers in the construction industry came close to its 50 middle mark, at 48.6. Even though the number is still below levels which indicate expansion, the figure was better than the expected 48.2.
The latest data from the Nationwide Building Society showed yesterday that confidence among savers and consumers increased during 2009. After starting at an all time low, the confidence figure slowly improved throughout the year and is now at 76 points, up 32 points on the year.
The GBP/USD presented an interesting turnaround session after forming a reversal candlestick. Technically, the GBP is now trading on support, below minor trend line resistance. A break of either two lines could lead this pair into a new trend.
Market Data to Watch Out For
Volatility should pick up over the next three trading days as the ECB and BOE are expected to release their rate decisions, while the U.S is scheduled to release employment data. The U.S will start off today and release their ADP result. This event is widely watched by investors as it is expected to give a clue as to the NFP result scheduled on Friday. Economists are expecting a -40.00k, compared to last month’s -84.00k.
To view the full economic calendar click here.
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