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It was the commodity market that took center stage yesterday as the Dollar dropped due to disappointing economic data from the U.S. Already during Asian hours the Dollar had lost its ground against counterparts, allowing Gold and Silver to climb to new levels. Gold the current leading commodity hit a new high for 2009, closing the session just under $1150. Silver, a commodity that has recently been lagging, soared higher throughout the session, but lost its steam as it ran into trend line resistance.
From a technical point of view, silver is now at the top of its trend line within its major uptrend. Even though indicators are still showing relative strength, current levels could act as resistance, especially if the broader market fails to continue higher.
Economic data helped to spark buying on the commodity market yesterday, as inflation numbers from the U.S showed that despite the slow recovery, prices are starting to increase. One must note that even though higher prices are often thought of as a good thing, especially when they rise due to healthy consumer consumption, rising prices along with low consumer consumption can often result in market fear, sending investors into safe-haven assets such as Gold, to hedge against inflation.
Consumer prices rose 0.3% in October with prices excluding food and energy rising 0.2%. In addition, the housing market continued to disappoint, releasing weaker than expected housing start and building permits. The numbers came out at 0.53M and 0.55M, respectively.
On the different currency pairs, Dollar counterparts managed to gain ground throughout the session, but failed to present any major moves. The GBP/USD presented an interesting session as the BOE released its minutes, showing that even though the members voted to leave rates at a low of 0.5%, not all the MPC members were in sync regarding future monetary actions. The minutes showed that policy makers are still debating whether the U.K’s economy will require further stimulus or not. Following the release, the markets took the news more than lightly and presented extreme volatility. The GBP/USD bounced back and forth by over 60 pips, before settling down to close with a minor loss.
The EUR/USD finished the session with a mild gain, while the Australian Dollar finished the session unchanged.Stocks Closed with Minor losses.On the Stock market the major indices finished the session with an average loss of 0.2%. The Nasdaq dropped the most out of the three major indices and closed down by -0.48%. Technology companies slid throughout the session after profit forecasts at Auto desk and Salesforce.com came out worse than analysts were expecting. Even though the sector weighed on the market throughout the session, financials helped to cushion the fall, providing support towards the second half of the trading day.
From a technical point of view the S&P500 is still trading within its uptrend but finished the session with a doji candlestick – one that normally indicates uncertainty in the markets.
Economic data to watch out ForLooking forward, England will start the morning off with a bang, releasing its Retail sales result. The numbers are expected to show an increase and come out at 0.6%. Throughout the session the U.S will take the stage and release its initial Jobless claims and Philadelphia Fed manufacturing Index. Even though the jobless situation isn’t expected to change, the manufacturing sector is expected to show an improving situation and come out with a 12.5 figure, compared to an expected 11.5.
To view the full economic calendar click here.
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