Market Movers of the Day
Asia-Pacific
Japanese GDP up 3.7% on an annual pace
Europe
EU trade balance at 1B Euros which is lower than expected
Swiss Retail Sales Up 0.9% YoY
Americas
NY Empire state manufacturing Index at 12.1 higher than expected
Net Long term TIC flows at 90.7B pointing better than expected demand for US Dollars
The Overall Sentiment
Sentiment was strongly negative as the notion among investors all growth trades are over heated have pushed equities, commodities and high yielding currencies south. The trade in Asia pacific opened with the Japanese GDP figure pointing the Japanese economy had grown 3.7% in an annual past. Although the GDP figure was slightly lower than the projected 3.9% it was positive and most importantly was driven by a rise in exports signaling the Japanese economy has started to recover. However markets in the region encountered strong selling pressure as fears the Chinese demand which has driven markets so far, could retreat to lower levels. In the London and US sessions the combination of the weak US consumer data a week before, the negative sentiment in Asia and the overall notion equities are over heated had given short sellers the upper hand pushing equities and most commodities sharply lower. At the day’s end the Dow was down -2% the S&P was down -2.43% and the FTSE -1.46% with markets almost indifferent to the positive manufacturing data coming from the US .In the commodities arena Gold fell below 940$ and Oil bellow 67$.In the FX trade the Dollar and the Yen traded higher with the Euro falling close to 1.4$ and the Sterling dipping the 1.63$ level.
The Day Ahead
The opening sentiment in Asia pacific is expected to be effected from the Japanese leading economic index figure due at the start of the Day with investors looking for more positive data as bets on Japanese recovery gain consensus. In addition the comments coming from the Australian reserve bank outlining a rate increase is possible if the recovery continues, could also affect sentiment of the Aussie against the Yen and the Dollar. The London session will be loaded with economic data on the UK consumer with the UK CPI and Retail Sales figures due at the early trading hours, where investors will look for more evidence of a recovery. In the EU the important ZEW survey figures are due later in the day with investors hoping for positive news after the positive GDP figures in Germany and France. The concluding data for the day will be the housing data and PPI figures in the US. Investors will look closely on the Housing data as a better than expected data could balance some of the negative consumer data from a week before. Overall sentiment will largely depend on the economic data with markets potentially moving either way.
Technical Analysis
CAD/JPY
The pair which had encountered strong selling pressure around the 89 area could be heading for a rebound. Looking at the Fibonacci retracement structure it is noticeable the pair has gained support at the 85 level which is in line with the 76.4% Fibonacci level, the minimum for technical adjustment. In addition the stochastic readings bellow pointing oversold levels could suggest the pair might try and return to the bullish trend. Nevertheless only a break of the 89 will truly confirm a return to the bullish trend. A break of the 85 level downwards will point on the 83.7 level as the next support.
Support/Resistance
| Currency | Support II | Support I | Spot | Resistance I | Resistance II |
| EUR/USD | 1.3880 | 1.405 | 1.411 | 1.42 | 1.43 |
| GBP/USD | 1.6 | 1.6250 | 1.636 | 1.65 | 1.665 |
| USD/CHF | 1.0460 | 1.0575 | 1.0759 | 1.0900 | 1.1020 |
| USD/JPY | 93.2 | 94.2 | 94.91 | 96.4 | 97.8 |
| USD/CAD | 1.04 | 1.0630 | 1.105 | 1.11 | 1.1365 |
| AUD/USD | 0.81 | 0.8170 | 0.8244 | 0.8320 | 0.847 |
| EUR/GBP | 0.84 | 0.845 | 0.8620 | 0.8650 | 0.8700 |
| NZD/USD | 0.6595 | 0.664 | 0.671 | 0.69 | 0.7 |
Daily Events
| Time(GMT) | Country | Event |
| 1:30 | Australia | RBA Meeting’s Minutes |
| 5:00 | Japan | Leading Economic Index |
| 8:30 | UK | CPI |
| 8:30 | UK | Retail Sales |
| 9:00 | EU | ZEW Survey |
| 9:00 | Germany | ZEW Survey |
| 12:30 | Canada | Canadian Investment In Foreign Securities |
| 12:30 | Canada | Foreign Investment In Canadian Securities |
| 12:30 | US | Housing Starts |
| 12:30 | US | Building Permits |
| 12:30 | US | PPI |
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