Europeans Inspire Markets |
Wednesday was another day of overall positives on the markets: at the end of the day, the EUR/USD pair fixed above 1.3800, adding more than 1.3%. The British pound rose to 1.5750 on the GBP/USD pair despite the country’s unemployment report showing the rate had increased to 8.1% (the previous figure was 7.9%); the average market forecast was 8.0%. All stock markets ended the day in the green zone, reacting to the positivity coming from Europe: yesterday, European Commission President Jose Manuel Barroso presented a plan to recapitalize European banks in order to protect Europe’s banking system from possible repercussions related to the debt crisis in the Euro zone. Also, the second vote on expanding the EFSF in the Slovakian parliament will likely take place on Friday, October 14. Members of the country’s ruling coalition have already reached an agreement with opposition leader Robert Fico on passing the amendments. Europe has recently been displaying a more coherent unified position to the rest of the world, which will only please investors who have a renewed appetite for risk.
The positive was also supported by the macroeconomic reports from Euro zone countries published yesterday: the region’s industrial production rose 1.2% m/m in August, or 5.3% y/y, although analysts had anticipated a 0.7% m/m decrease and a 2.2% y/y increase.
The minutes of the US Federal Reserve’s most recent Federal Open Market Committee (FOMC) meeting were published yesterday, but they didn’t give traders any new information, therefore no real speculative reaction followed the publication. There was also very little, if any, reaction to ECB President Jean-Claude Trichet’s speech at 10:30PM (Moscow Time) at the annual meeting of the Association for Financial Markets in Europe in London.
One of the most important events of today will be the publication of data on foreign trade (trade surplus) in the UK, Canada, and the US. Corporate reports will also be published for JP Morgan Chase at 3:00PM (Moscow Time) and for Google Inc., which will be published after the American stock market is closed.
At 4:30AM (Moscow Time), data came out on unemployment in Australia. The country’s unemployment rate fell to 5.2%, which lent support to the Australian currency.
Gold is restoring its positions to the extent that the situation with the Euro zone’s debt crisis is improving. In trading on the COMEX, the most actively traded gold futures for December delivery rose $21.60 in price, or 1.3%, to $1682.60 per troy ounce. Gold futures for October delivery also rose by $21.60, or 1.3%, to $1681.30 per ounce. At the time of writing, the spot price on gold was $1680.57 per troy ounce. After a rise in trading yesterday to over $1690, quotes corrected downward, as some traders preferred to fix their profit after the growth seen the past few days. Some RoyalMaxBrokers experts are of the opinion that gold needs to fix above $1675/oz in order to have this upward trend continue.
The growth in oil futures was interrupted on Wednesday; trading on the NYMEX saw light sweet oil futures for November delivery drop 24 cents, or 0.3%, to $85.57 per barrel. Brent oil futures on the ICE went up 63 cents, or 0.6%, to $111.36 per barrel. At the time of writing, WTI oil futures for November delivery were $85.03 per barrel. RoyalMaxBrokers analysts say that it seems like oil prices are consolidating on their achieved positions and traders are deciding where to go from here. Possibly one of the most interesting market traits of the past few days was the renewed increase in the spread between contracts on Brent and WTI oil, which narrowed recently after reaching an all-time high of $26.67 at the beginning of September. Last week, the spread was $22.90, but on Wednesday it again rose to $25.79.
About the author: Royal Max Brokers
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