FYI | Jul 11 2012
By Andrew Taylor, Market Strategist GFT
Top Headlines
o AU Home Loans drag for May & Consumer confidence
o US Corporate Earnings weigh on growth outlook
o FOMC minutes on the hit list
o Market Moves:
· EUR/USD holds above 1.2247; AUD/USD up slightly off lows at 1.0178
· Commodities see a slight bid tone in quiet trading
The upbeat tune that the European session left for the US quickly soured as traders gained early glimpses into the upcoming corporate earnings season which doesn’t bode well for the days ahead. This set the tone for the Asian session who decided to carry the worries of the world which pushed equity markets lower and weighed on risk markets in general.
Domestic data for Australia showed that the uptake of new home loans took a backward step in May falling by 1.2% vs 0.7% forecast. This is in the same month that the RBA cut rates by 50bps. This print may be a little too soon for the effects to filter through to borrowers.
Westpac Consumer Sentiment index should the state of the consumer had improved, albeit it still in negative territory, thanks in part to recent rate cuts, falling petrol prices, a stock market and currency that had rallied all added to the positive feel amongst the nation.
Outlook
European markets are expected to open lower and remain fairly range bound leading into the FOMC minutes which will no doubt be dovish. The board’s decision to extend Operation Twist can only stem from immediate concerns that require this type of action. Just how dovish will determine the level of market action that will take place post release. This should see the QE3 cheer squad (pom poms and all) out in force and doing their bit by providing support for risk assets. This may create a nice opportunity to fade the buoyant moves considering that we are still three weeks away from the next FOMC meeting.
Economic Events to watch:
0600 GE Jun CPI
0645 FR May Balance of payments
0800 EU Jun Long term interest rates statistics
For more intraday analysis and trade ideas, follow me on twitter @ATaylor_GFT
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