Geithner to the Rescue?
Friday, March 27, 2009
By dodjit.com
The U.S stock markets continued to drive forward yesterday, closing the session with gains of approximately 2.5% on the major indices. Small Caps received most of the boost, as the S&P Small Caps index closed the session with gains of 4.45%. The Russell 2000 finished higher, increasing during the session by 4.40%.
Economic data continued to affect prices, dragging down the markets throughout the first half of the session. The revised GDP figure in the U.S showed a -6.3% result, the worst in 26 years, while unemployment claims jumped to a record high of 652.00k.
Why is the market rallying?
Over the last two weeks the U.S markets has rebounded significantly, climbing higher on a day to day basis. To most investor’s surprise, the major indices haven’t even pulled back on profit taking, climbing higher during most of the sessions. Even though economic data continues to paint a gloomy picture, certain indicators are starting to show signs of improvement in the financial sector and among investor’s confidence.
With officials ruling new regulatory laws, while simultaneously pumping money into the system, to jump start the economy; expectations are now beginning to rise, as investors are hoping that the efforts will help to do the trick. Timothy Geithner released his notes yesterday, mentioning that his new plan will give officials further authority over the financial system, to prevent an additional catastrophe in the future. The new rules will allow treasury to intervene in the future with more ease overtaking companies that are doomed to fail. This way the treasury will have supervision over large financial companies, preventing defaults and closures, similar to what happened to Lehman Bros.
.
The Dollar has gone to sleep
Over the last couple of trading days the Dollar index has drifted into ‘snooze’ mode consolidating around the 84 level. As mentioned on the video briefing, the Dollar index should continue to drift around this level providing no influencing data is released.
The major mover yesterday was the New Zealand Dollar increasing rapidly across the board. The move came as the RBNZ refused an emergency meeting, showing their lack of response to recent requests regarding emergency money funding. The NZD/USD increased breaking minor resistance of 0.5750, while the NZD/JPY broke its prior high that was formed at the start of 2009.
Gold continued to trade in recent range, holding support above its 50 day moving average. Crude oil increased during Asian hours, but lost its steam retracing back to $53 per barrel.
Whats coming up?
The GDP result will be released later today, showing further deterioration in the U.K’s economy. The result is widely expected to show a further contraction of -1.5%. In addition Personal spending and the Core PCE Price index is scheduled to be released in the U.S. Even though the index is expected to show a 0.1% increase, analysts’ are expecting a further decline in personal spending compared to last month’s 0.6% result, due to the lack of consumption.
GBP/USD 8 hour chart
Market pivot points
Friday, March 27, 2009
By dodjit.com
The U.S stock markets continued to drive forward yesterday, closing the session with gains of approximately 2.5% on the major indices. Small Caps received most of the boost, as the S&P Small Caps index closed the session with gains of 4.45%. The Russell 2000 finished higher, increasing during the session by 4.40%.
Economic data continued to affect prices, dragging down the markets throughout the first half of the session. The revised GDP figure in the U.S showed a -6.3% result, the worst in 26 years, while unemployment claims jumped to a record high of 652.00k.
Why is the market rallying?
Over the last two weeks the U.S markets has rebounded significantly, climbing higher on a day to day basis. To most investor’s surprise, the major indices haven’t even pulled back on profit taking, climbing higher during most of the sessions. Even though economic data continues to paint a gloomy picture, certain indicators are starting to show signs of improvement in the financial sector and among investor’s confidence.
With officials ruling new regulatory laws, while simultaneously pumping money into the system, to jump start the economy; expectations are now beginning to rise, as investors are hoping that the efforts will help to do the trick. Timothy Geithner released his notes yesterday, mentioning that his new plan will give officials further authority over the financial system, to prevent an additional catastrophe in the future. The new rules will allow treasury to intervene in the future with more ease overtaking companies that are doomed to fail. This way the treasury will have supervision over large financial companies, preventing defaults and closures, similar to what happened to Lehman Bros.
.
The Dollar has gone to sleep
Over the last couple of trading days the Dollar index has drifted into ‘snooze’ mode consolidating around the 84 level. As mentioned on the video briefing, the Dollar index should continue to drift around this level providing no influencing data is released.
The major mover yesterday was the New Zealand Dollar increasing rapidly across the board. The move came as the RBNZ refused an emergency meeting, showing their lack of response to recent requests regarding emergency money funding. The NZD/USD increased breaking minor resistance of 0.5750, while the NZD/JPY broke its prior high that was formed at the start of 2009.
Gold continued to trade in recent range, holding support above its 50 day moving average. Crude oil increased during Asian hours, but lost its steam retracing back to $53 per barrel.
Whats coming up?
The GDP result will be released later today, showing further deterioration in the U.K’s economy. The result is widely expected to show a further contraction of -1.5%. In addition Personal spending and the Core PCE Price index is scheduled to be released in the U.S. Even though the index is expected to show a 0.1% increase, analysts’ are expecting a further decline in personal spending compared to last month’s 0.6% result, due to the lack of consumption.
GBP/USD 8 hour chart
Market pivot points
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