Daily Market Review July 28, 09

Market Movers of the Day

Europe

*GfK AG’s German Sentiment Index for August increased for a third month to 3.5, the highest in 14 months, from a revised reading of 3 for July.

*French Jobless figures dropped 0.7% for the first time in 2009

*Hungary reduced benchmark interest rate for the first time in six months to 8.5% from 9.5%

*UK Nationwide Housing Prices remained unchanged

Americas

*New U.S. home sales rose by 11% to 384K, the largest monthly rise in more than 8 years

 

The Overall Sentiment

Positive sentiments today as the markets were triggered by the better-than-expected rise in New U.S. home sales. US stocks continue to advance following the Dow Jones rally. In the U.S It would appear that treasuries have dropped despite the start of a US Treasury auction for a record amount of $115B in notes.  As a result, the perception of an oversupply of notes and the positive New Home Sales data boosted risk appetite, pushing equities higher and sending the Dollar closer to its lowest level since the beginning of 2009 (relative to most of the other majors). The Yen can also be seen to have dropped against most of its rivals, whilst the pound advanced against the Dollar and the Euro as UK house prices remained unchanged for a third month since May, Indicating that perhaps the worst of the country’s recession might be over. 

The Day Ahead

One can expect a busy day in Australia following the release of the National Australia Bank’s Business Confidence figure and RBA’s Governor Glenn Stevens’ Speech. However, the central focal point will be on the US Consumer Confidence survey for July, which according to market expectations is due to fall from 49.3 to 49 thus affecting current positive sentiment. Last but not least, the second part of Bernanke’s recorded meeting is scheduled to air today and the direction of the stock market should be closely followed as corporate earnings reports may well continue to beat expectations.

Support/Resistance

 

 

 

Technical Analysis

 GBP/JPY DAILY

GBP/JPY has been moving in an uptrend since the beginning of 2009. After some sideways trading in the 155-162 range the pair dropped rather sharply to test the long-term upward support line at around 147. Failing to break underneath, the pair bounced back up and developed a short-term bullish trend in the last few days. If it continues its advance, GBP/JPY should encounter selling pressure at the 160 resistance that could send it back for a retest of the overall bullish trend line.

EUR/AUD DAILY

A long-term bearish trend bottomed at around 1.72 for EUR/AUD sending the pair for a correction of over 800 pips in a month. After topping just below 1.81 the pair made a sudden change of direction and gave back all of the gains in about two weeks. The pair is currently approaching the critical support of 1.72 where it should come across some buying activity as it will be hard to break through these crucial support levels without facing any obstacles in the way.

 

Daily Events

 

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