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Dow tops 10,000, Crude hits $75, EUR/USD climbs to $1.4950
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It was another positive day on Wall Street yesterday as earnings and the Fed’s minutes helped to drive the indices higher. The Dow increased by 144 points to close above 10,000 for the first time since 2008, while the S&P500 broke prior resistance to close with a gain of 1.75%.
J.P Morgan and Intel both helped to pull the indices higher yesterday, as both the companies beat analyst’s expectations. J.P Morgan closed higher by 3.29%, after showing profits of $3.6 billion. Intel climbed by 1.66% to close at a yearly high. Even though the company’s earnings fell 13% in the third quarter, Intel managed to beat analyst’s estimates by 18%, causing the stock to rally.
On the data front, retail sales surprised investor’s coming out at a negative -1.5%, compared to analyst’s expectations of -2.0%. In addition the Fed helped to boost the trading day mentioning positive words in its minutes. The fed mentioned that the economy is slowly recovering, but they are still reluctant to engage in any exit strategies. Furthermore the statement showed that even some members of the Fedwould prefer to extend the Mortgage Backed Security purchases beyond the current one. When analyzing the statement together with yesterday’s price action, one can only assume that investors are quite pleased that the Fed aren’t showing signs of monetary tightening, unlike the Australian economy. This could help drive stocks higher, but have a negative effect on the U.S Dollar.
Dow Jones Industrial Average- Daily Chart
Dollar continues to lose groundAs shown in previous reports the Dollar index continued to lose ground, dropping to the 75 level. Investor’s sold the Dollar during yesterday’s session and headed into riskier assets, or assets that are now presenting a higher yield.
The EUR/USD and the AUD/USD both acted as preferable currency pairs yesterday, climbing higher throughout the day. The EUR/USD broke resistance to hit an intraday high of $1.4937. During morning hours the EUR/USD continued to climb higher and has now presented a clear break of recent resistance. Even though this pair could continue to climb to upcoming resistance of $1.53, one must take into consideration that the EUR/USD has already been climbing for the last 10 days without presenting a comfortable pullback. Could the EUR/USD be now slightly over extended?
Across the globe the BOJ left its central rate at 0.1% after all board members voted for a ‘no change’. Even though the Bank of Japan stated that their economy is slowly picking up and that the need for further emergency funding is now declining, they failed to mention any exit strategies. Household confidence improved slightly to 40.5, while their domestic inflation rose by 0.1%.
From a technical point of view the USD/JPY is still lingering around recent levels stuck above prior lows. For further analysis on the EUR/USD and USD/JPY see the chart analysis page.
On the commodity market, crude oil took center stage as the black gold climbed above prior resistance to close above the $75 mark. Similar to the Euro, this chart is showing signs of being over extended something that could lead to a pull back in the short term.
For a complete analysis including further charts, click here
Market Data to Watch OutThe last couple of days movements have been mostly influenced by U.S stock sessions, as higher stocks have had a positive influence on the various currency pairs. With the Dow Jones Industrial Average now above the 10,000 mark and the Dollar losing further ground, there could be some more room for further gains. This also leads us to conclude that the U.S indices will continue to lead the markets. On the data front, apart from inflation results from Europe this morning, the U.S data will continue to grab the center of attention. Initial jobless claims are scheduled to be released and show a minor climb, while the CPI figure is expected to show a minor decrease. Furthermore the NY Empire State Manufacturing Index and Philadelphia Fed Manufacturing Index are both scheduled to be released, during today’s session.
To view the full economic calendar click here.
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