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Stocks Pause... Two Rate Decisions Ahead
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Thursday, February 04, 2010
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By stocks pause... two rate decisions ahead
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After a two day rally, the U.S stock market got stopped in its tracks and closed the session mixed. The Nasdaq managed to finish the day higher with a mere gain of 0.04%, while the Dow Jones finished the session down by -0.26%.
Economic data had a mixed effect on the session as ADP Nonfarm Employment Change dropped less than expected by -22.00k. Economists were expecting a -40.00k figure, compared to a prior -61.00k. According to the numbers, the January employment decline was the smallest since employment began falling in February of 2008. Even though the number came out better than expected, ISM Non-manufacturing index dropped to 50.5, compared to an expected 51.00 figure. The number showed market participants that non-manufacturing activity was still finding it hard to fully recuperate.
The Asian market followed the U.S during early morning hours and retreated after presenting hefty gains. In addition news from Australia and New-Zealand pushed the indices lower after Australian retail sales unexpectedly dropped and New-Zealand’s jobless rate jumped to an astonishing 7.3% - according to the stats this is the highest level in more than 10 years.
The S&P500 finished the session just off major resistance. For a full analysis, please see yesterday’s report. Healthcare weighed on the market and closed with a loss of -1.34%. Technologies finished in green with a 0.23% gain.
The Dollar gains MomentumAfter stalling for a few days the Dollar index managed to regain back its speed and continue higher. A negative day on Wall Street helped to push the index higher and sent the index up to touch a new year-to-date high. One must note that the index is trading above its 200 day moving average, meaning that the index has entered a bullish market.
On individual pairs the EUR/USD received a boost during the session, after Greece’s plan to reduce their deficit got backed by the EU. According to yesterday’s headlines, EU Economic and Monetary Affairs Commissioner Joaquin government said that the EU is “endorsing the Greek program” even though implementing it won’t be easy. The EUR/USD ended the session in negative territory as market skepticism prevented this pair from maintaining its relative strength.
The GBP/USD finished the session lower after U.K services PMI dropped to 54.50 vs. an expected 56.80 figure. The disappointing figure brought the GBP/USD down to major support as it reminded investors that the economy remains fragile.
Market Data to Watch Out ForThe ECB and BOE will both take the stage today and release their rate decisions. While the BOE’s decision could cause movement on the GBP/USD, especially around critical levels, major movement should occur tomorrow due to the scheduled NFP result. According to recent data the U.K is slowly recuperating showing relative strength in the retail and housing sector. Jobless Claims are still at high levels. The ECB isn’t expected to make any changes to its monetary rate but will comment on recent issues regarding Greece’s deficit.
To view the full economic calendar click here.
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