Majors Look Forward For The U.S. Open

Overall, the market had no real volume or momentum during the overnight session. The majors moved mostly out of inertia, responding to the negative U.S. futures. The dollar and the yen were still the biggest gainers from the overnight session, but the gains were modest. Ahead, the market is expected to pick up during the U.S. open, when a number of important releases are scheduled, including CPI data.

The Euro (Eur/Usd) fell 50 pips during the overnight session, but the pair traded on weak momentum. Additionally, the pair managed to break below a descending triangle formed yesterday, but still the euro was unable to move decisively lower.

The Pound (Gbp/Usd) followed the same pattern of trading as on Tuesday. The pound was unable to move anywhere decisively, and traded on a weak momentum. However, despite the lower expected DCLG HPI numbers the pair strengthened after the release. The 4h chart is a mess with most candles having a small body, but rather long wicks.

The Aussie (Aud/Usd) fell to TheLFB S1 (0.7165) area during the Asian trading hours, but since then the pair moved side-ways. The negative equity markets of the last few trading sessions have had a negative effect on the Australian dollar, since the Australian dollar is susceptible to risk aversion.

The Cad (Usd/Cad) lacked any real momentum during the overnight session. Most of the time, the pair traded side-ways, slightly above the neutral pivot point (1.214%). However, the cad did manage to post its first gains in the last seven days during the overnight session.

The Swissy (Usd/Chf) advanced 60 pips during the overnight session, near TheLFB S1 (1.1440). Additionally, the swissy is trading near the same area where the pair peaked on Tuesday. For the moment, the pair trades between the 20 and the 100-day simple moving averages.

The Yen (Usd/Yen) fell 80 pips during the Asian trading hours, down to TheLFB R1 (98.20), but recovered every pip lost soon after the London open. Overnight, the yen followed the U.S. futures closely. For now, the pair trades trapped between the 20 and the 200-day simple moving averages.

Overnight Markets Turn Negative On Earning Results

Current Futures: Dow -36.00, S&P -4.70, NASDAQ -13.75

European equity markets opened lower, following the negative momentum seen in the Asian markets and U.S. futures. The markets turned lower after some poor earnings results came in from the financial sector.

Over the last month, the equity markets were pulled higher by banks announcing they were profitable in the first part of the year. However, not all of them were, since UBS announced a 2 billion Swiss franc loss in the first quarter. The same toxic assets continued to be a drag on UBS’s balance sheet, causing a 3.9 billion franc loss over the first three months of the year. In order to reduce costs, UBS plans to reduce 7,500 work places by 2010, or a little more than 10% of the current global work force.

"UBS is the first major bank to report losses in the first quarter. Among other things, it shows that the conditions in the credit market have still not improved noticeably. Because UBS operates in the same global market as Goldman and Well Fargo, this might be a clue that the pre-announced Q1 earnings received a face-lift from the new accounting rules," TheLFB-Forex.com Trade Team notes. "Ironically, UBS was among the banks that said it was profitable in the first quarter, some time back"

If additional data is needed to highlight the tough times in the corporate debt market, just take a look at Rio Tinto. The largest mining company in the world, Rio, sold $3.5 billion of debt at 3% higher than a similar sale one year ago. To make the matters worse, the spread between Rio’s debt and the government debt is at an alarming size. Rio sold $2 billion of debt with a five-year maturity at 8.95%, 752 points higher than what the government pays for a similar loan, and $1.5 billion with a 10-year maturity, that has a 660 point spread over a similar Treasury loan.

Overnight, the Nikkei fell 99.72 points (1.13%) to 8,742.96. The Australian S&P/Asx fell 5.40 points (0.14%) to 3,747.50. The U.K. Ftse fell 9.69 points (0.24%) to 3,979.30, while the German Dax declined 56.78 points (1.25%) to 4,500.23

Crude oil for May delivery was recently trading at $49.05 per barrel, down by $0.30.

Gold for May delivery was recently trading down by $1.30 to $890.70.

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com

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