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Home > Articles > Market Briefing > Earnings are Paving a Smooth Road to Recovery, the Dollar Could Fall, GBP/USD Potential Short Term S
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Earnings are Paving a Smooth Road to Recovery, the Dollar Could Fall, GBP/USD Potential Short Term S
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Yesterday’s U.S stock session was all about earnings as some of the largest names posted their reports for the third quarter. The major indices started the day on a negative note, but managed to regain strength during the intraday session. The intraday turnaround was backed by promising outlooks, from some of the large caps.
The indices dropped at the opening bell as CIT Group INC. dropped by 11.54% due to a sudden headline mentioning that CEO Jeffery M.Peek will resign at the end of the year. The commercial lender immediately took a blow as analysts assumed that the sudden move could lead the company to file for bankruptcy chapter 11.
Despite the negative start J&J and Intel both reported better than expected results. Johnson & Johnson reported moderately higher third-quarter earnings but its sales were a disappointment. Even though J&J’s report was better than expected the stock dropped by over 2%. Intel, on the other hand reported a drop in profit but posted reports and expectations that exceeded the street’s expectations. The stock jumped at the start of the session, but failed to follow through, throughout the day. Intel finished the session higher by a mere 0.26%.
From a technical point of view the major indices are still showing positive signs, but have yet to break major resistance. The S&P500 broader market index, is now trading around its prior high.
Now Under 76 Points. It was full steam ahead during Asian hours early morning, as risk appetite increased across the board. On the Forex market, investors sold the Dollar, sending the index down below its 76 support level. When taking a glance at the chart below, one can see the index has now breached support and now seems to be heading for target 1.
Dollar Index - Daily Chart
The overnight movement had a positive effect on all the currency pairs, sending counterparts higher. The Euro and the Australian Dollar took the lead, charging higher. One must note that even though the trends on both the charts are still gaining momentum, both the currencies against the U.S Dollar are trading around resistance.
AUD/USD- Daily Chart
The Pound managed to trick traders once again, as it formed a false break after bouncing back into range. Even though economic data showed that the BOE could continue to maintain a low rate and further stimulate the economy, the Pound managed to find intraday support and climb higher, backed by overall Dollar selling. During yesterday’s session economic data showed that inflation was still a problem as both the CPI yearly and the Core figure dropped below expectations. With two opposite forces now affecting this pair; bad data and overall Dollar selling, it will be interesting to see which way is now preferred by investors .
GBP/USD – Short term setups
Market Data to Watch Out ForApart from earnings scheduled to be released in the U.S, economic data will continue to flood news headlines. England will take the stage first, releasing its Unemployment rate. Analysts are expected a jump to 8%, from last month’s 7.9%. Throughout the session the U.S will grab the center of attention releasing its Retail Sales and FOMC meeting minutes. Retail Sales are expected to show a drop in activity and could show a negative 2% this month. Following the U.S session, Australia will release its inflation figures and expectations for the upcoming year.
To view the full economic calendar click here.
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