The US Dollar lost some ground overnight after Federal Reserve Chairman Ben Bernanke’s latest congressional speech provided a more negative assessment of the US economy, which gave rise to the regular speculation that the quantitative easing program is not actually over. The other main central bank story was seen in Japan, where the BoJ elected to hold interest rates steady during its monetary policy meeting (in line with market expectations). There were also no changes seen in the bank’s asset purchase program and the Yen was modestly weaker after the announcement.
In the UK, the FTSE 100 futures are suggestive of a lower open (of about 50 points) ahead of today’s DCLG Housing Price Index. No major corporate earnings will be released today, so market activity is expected to be driven more by sentiment than data into the middle of the week. In Asia, equity markets closed mixed, with positives seen in the export sector (specifically in auto companies like Toyota, Honda and Nissan) on the weaker Yen.
In the US, S&P futures are trading essentially unchanged with today’s macro data coming in the form of the NFIB Business Confidence survey, and the Wholesale Inventories figures both scheduled for release. We will also see some significant corporate earnings reports, with Alcoa, Supervalu, and Standard Micro Systems on schedule today. Chesapeake Energy was one of the bigger gainers yesterday, with a rise of 1.4 percent on news of real estate sales to Exxon, valued at roughly $600 million. Equity prices on the whole finished lower in the US on Monday, on last week’s disappointing employment data, which was the lowest number this year.
In Europe, both the DAX and CAC are pointed to much lower opens (roughly 115 points lower in the DAX). Most of the significant data will come out of Germany, with Current Account figures, the Wholesale Price Index, and Trade Balance all scheduled for release. Swiss employment figures will also get some attention, given the latest volatility seen in the EUR/CHF currency pair. Corporate earnings will come from Synergie, Tessi SA, Delta Plus, and Micropole.
The USD/CHF is coming into some significant long term resistance levels, so we are looking at a critical inflection point for the pair going forward. At the moment, downtrend line resistance is aligning with the 61.8 Fibonacci retracement of the decline from 0.9330. This area is also a triple top on the shorter term charts, so there are likely to be stop losses in this area and a break of the downtrend line will turn the longer term bias to bullish.
Gold prices have hit the support level that we have been watching for about two weeks. Prices did manage to drop below the Fibonacci level seen at 1620 but follow through was limited and prices are currently seen consolidating slightly above. The bounce was lackluster as well, however, and we are expecting to see a daily close below 1620 sometime this week. Selling rallies is the preferred strategy, a break back above 1700 will take pressure off of the downside.