Markets Drift On One Year Anniversary Of Recession Lows
Asian markets were mixed today after US markets closed largely unchanged yesterday. Markets had rallied on better than expected employment data out of the world's largest economy on Friday. Non-farm payroll figures showed the US had shed some 36k jobs, beating analyst forecasts for a drop of 68k. Although job loss continues to plague the workforce, a decrease in jobs lost suggests that unemployment may be bottoming, with the rate coming in unchanged at 9.7%. US markets had rallied sharply on the data Friday, boosting Asia Pacific markets yesterday, with the Nekkei 225 and the Hang Seng index both gaining nearly 2%. As markets digest the news, eyes once again return to the sovereign debt issues in the eurozone. Over the weekend, French President Nicolas Sarkozy had reaffirmed the EU's commitment to Greece and the euro currency as a whole, spurring an increase in risk appetite as investors look to higher yielding currencies. The euro's gains were subdued however, on remarks from Greek Prime Minister Papandreou who warned that the countries current borrowing costs are 'unsustainable,' and that further deterioration in Greece could lead to another global financial crisis.
Euro Trends Lower
Markets drifted today as uncertainty about conditions in the Eurozone once again weigh heavily on investors. The euro was softer pre market open in London having testing the 1.37 handle yesterday. Bearish sentiment persists as the single currency remains under heavy pressure. Sitting just below the 1.36 figure, support for the euro rests at 1.3570 followed by 1.3520 and the 1.35 handle. A break under the figure leaves additional demand at 1.3450 and lower at 1.3370. To the upside, resistance holds steady at 1.3650 backed by the 1.37 handle. Critical resistance rests with the upper band of the downward channel dating back to the Dec 3rd high at 1.3790. A break here leaves additional ceilings at 1.3830 followed by 1.3920 and 1.3980.
Aussie Strength
The aussie was slightly firmer today having broken through the .9085 resistance level yesterday. Better than expected data in the past few weeks has launched the currency more that 3.5% from the Feb 25th low at the .88 handle. The aussie sits just below with .91 figure with considerable gains possible with a break of the .9130 level. Resistance rests at the 100% Fibonacci extension taken from the Dec 23rd and Feb 5th lows at .9170. Additional ceilings appear at .9280 backed by .9320. Downside momentum picks up with a break of .9020, with demand resting at .8940. Losses will extend with a break of the .8850 support.
Cable's Rally Ends
The cable's rally from the March 1st low of 1.4780 seems to have ended with a break back under 1.5120 yesterday. The pound fell today on a worse than expected trade balance for the month of January. The gap widened to -7.99 billion pounds, almost 1 billion more than analyst forecasts. With a debt to GDP of more that 12%, the UK's deficit rivals that of troubled Greece. Sterling remains under pressure as concerns about the deficit and the possibility of a hung parliament mount. A fall below 1.4950 leaves room for considerable losses for the pound with support levels emerging at 1.4880 followed by 1.4770 and 1.4720. Upside momentum picks up only with a break of 1.5190 with significant advances possible past the1.5240 resistance level.
Today's economic calendar is relatively quiet, which may leave the current news driven markets without clear direction. Tomorrow, Japan reports on corporate goods prices and Germany releases data on CPI, exports/imports, and HICP. The UK is expected to report a slight decrease in industrial and manufacturing production. US equity futures point to a lower open after European markets trend to the downside early in London trade.
MG Financial Group
http://www.mgforex.com
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