Economic data drove the major stock indices into a positive session yesterday, as employment figures showed a slight improvement, while the closely watched housing sector surprised investors for the better.

Initial jobless claims dropped to 466,000 from 501,000, beating analyst’s expectations. The numbers showed that the people collecting unemployment insurance dropped in the prior week, while those getting extended payments also declined. Housing starts also showed a major improvement as the numbers came out at 430,00k, compared to a forecast of 408,00k. The 6.2% jump was mainly due to an increase in demand in more southern states. 

The Federal Reserve also had its daily affect on the markets, giving a statement that stressed the importance of a low rate environment. Even though the fed acknowledged that the current 0.25% rate is causing speculation of a higher stock market, they stated that current conditions are required to help the economy. The Fed mentioned that the lagging sectors in the economy should start to turn around; including housing and personal consumption, but the recovery will take time.

Stocks pushed forward yesterday and closed the session with mild gains. The S&P500 finished the session with a 0.45% gain, around prior resistance, while the Nasdaq climbed by a mere 0.42% to close at 1793.67 points.

The Dollar sky dives

On the Forex market, the Dollar index gave in to bearish pressure and dropped by 1.17% to close at a 1 year low. Even though the equity market didn’t present any major movement, recent price action, and comments from the fed sent the Dollar lower.

The Dollar tumbled to a new low against the Yen Thursday afternoon after the U.S indicated that interest rates will remain low and the Federal Reserve isn’t concerned about the U.S Dollar. Japanese officials immediately expressed their concerns, stating that they could intervene if the Yen further strengthens. One must note that a strong yen is considered bad for Japan as it hurts their exports.

From a technical point of view the USD/JPY is now heading lower after breaking trend line support. By taking a glance at the chart below one can see that the next level of support is at the chart’s 15 year low.


 
The EUR/USD also presented an interesting session, climbing above major resistance of $1.5071. It wasn’t the Euro’s affect this time round that drove the pair higher, either broad Dollar weakness. The EUR/USD is now presenting a mild intraday correction after finishing yesterday’s session at a 1 year high.

From a technical point of view, the Euro is climbing higher and seems to be heading for its next resistance level. One must note that at high levels, current trades have more risk, especially if stocks suddenly decided to change direction. 


 

Economic Data to Watch Out For

On the data front, Europe and Japan will receive major focus today as both are expected to release a wave of data. The Euro-zone is scheduled to release its M3 Money Supply and Private Loans. Both are expected to present disappointing figures.

During the session Japan will release its unemployment rate and retail sales. The unemployment figure is expected to reach 5.4%, compared to last month’s 5.3%