Investors became skeptic around high levels yesterday, sending the major stock indices into negative territory. Risk aversion already appeared at the start of the U.S session, as economic data showed that the employment situation wasn’t improving. Even though other leading indicators such as the Philadelphia Fed manufacturing index, showed that certain parts of the economy are still improving, it wasn’t enough to prevent an equity drop.

Initial jobless claims weighed on investors at the start of the session, as the number showed that a further 3000 people had filed for unemployment benefits this week. Analysts were expecting only 502k, but the result came out at 505k. In addition, the leading index which measures the overall economic health, by combining 10 indicators such as building permits, new orders, money supply and average workweek, disappointed analysts, whom were expecting a 0.5% figure. The number came out at 0.3%.

Stocks nose dived at the start of the session, led lower by the techs. Even though the major indices found support during the session, all the three indices closed in red. The S&P500 finished the session, with a loss of -1.34%, while the Nadaq closed down by 1.58%. By taking a glance at the chart below one can see that yesterday’s session, sent shivers down investor’s spines, especially as volume exploded higher.


 

Forex Pairs Present a Calm Session

On the Forex market the Dollar index presented a lackluster session, as most of the currency pairs failed to present any major movement. The Dollar index finished the session above 75 points.

A wave of economic was released during morning hours, but most of the data was brushed aside by investors. England showed that their retail sales hadn’t changed compared to last month’s 0.4% figure, while their public sector net borrowing jumped by a whopping 5.60B to 11.40B. Canada also released some numbers showing that their leading indicators had declined, while their wholesales had increased by 0.2%, compared to a previous -1.5%.

While most of the currency pairs, traded around recent levels, the EUR/USD caught most investor’s eyes, as the pair is now trading within a wedge formation, failing to present a major pullback. When observing the chart below one can see that the EUR/USD is now trading above major trend line support, and below its secondary trend line resistance. While further selling pressure across the board could lead to Dollar strength, one must note that similar to last year’s massive rally, the Euro is often favored by investor’s, especially as it is known to present an end of year rally.


 

Economic Data to Watch Out For

After yesterday’s massive drop, the U.S will take the lead today. Volatility should pick up towards the U.S opening bell. On the data front, the economic calendar is light on data today, with only a few speeches from policy makers.