The Euro is down across the board on Monday amid concerns that peripheral debt problems are resurfacing. Issues began to resurface last week, culminating on Friday when the 10-year Irish Bond yield stood at record spread over the comparable German debt and similar Spanish/German yield Gap rose to its highest since mid-July.
U.S. equity markets are called higher this morning buoyed by increased demand for higher risk assets and underpinned by forecasts of a Republican victory in today’s elections.
U.S. September Non-Farm Payrolls fell by 95,000 with the private sector coming out at 64,000, in line with expectations. Overall one has to conclude the report was close to what traders were looking for. This could mean more of the same trading pattern which we have been witnessing the past couple of weeks.
An emergency easing by the Bank of Japan may have backfired overnight as the Yen erased its early losses against the major currencies. The BoJ made the move in the hopes it would weaken the Japanese Yen, but instead it’s business as usual this morning with the Yen sharply higher versus the U.S. Dollar.
All of the commodity-linked currencies were down hard on Wednesday. The Australian Dollar was down the most because of its strong link to China. Downside momentum is building in this market which could trigger a test of the last main bottom at .8904. Ultimately, this market seems destined to test a major 50% price level at .8644.
Stock indices extended their gains on Monday boosted by a strong outlook for the global economy. In the meantime, the outlook for the U.S. recovery weakened as July PMI fell and Fed Chairman Bernanke expressed his concerns for labor and housing.
The Euro is under pressure this morning following reports of a leak in the release of the European bank stress test data which was originally scheduled to be revealed on Friday. The leaks revealed that Spanish and Greek banks are expected to pass the tests which raised concerns among investors about the stringency of the tests.
Strong gains in metal and energy stocks helped turn U.S. equity markets higher, erasing early session losses. Stock futures clawed back to positive after opening sharply lower this morning. Equity markets were already trading down because last night IBM and TI reported lower than expected revenue figures when Goldman Sachs said that its second-quarter profit tumbled 82%.
U.S. stock futures are called higher this morning as investors look forward to a positive earnings season. Late yesterday Alcoa kicked off earnings season by reporting a $136 million profit on stronger-than-anticipated 22% revenue growth. Shares climbed after the report helping to drive the Dow higher.
The direction of the U.S. Dollar on Wednesday will be determined by the ADP Employment Report. This conclusion is being supported by both fundamental and technical factors.
