Overview: Bias to risk assets as stocks and commodities are mostly higher, with Asian and European stock markets responding much more positively to the new US stimulus plan than the US markets did. See today’s special report: WEDNESDAY 101103 GLOBAL MARKET DIARY SUMMARY US STIMULUS TRADING RAMIFICATIONS. China, Korea already voice displeasure, Japan maintains sullen silence but obviously they are not pleased to see the JPY strengthen vs. the USD.
USD weakness helps the EUR to continue to show strength despite a wave of bad news that would have sank it in the past. With uncertainty lifted about US stimulus and the USD, could markets now shift focus back to the EUR’s troubles? Is the EUR the next great short? See our special report: Denial Not Just River In Egypt But A Haze Over Europe for details.
STOCKS: US Up- Only modest gains despite otherwise positive US data as markets begin to digest the new US stimulus plan after weeks of speculation, but S&P 500 edging up to key resistance at 1200.
US Bonds: Up- 10 Year Note closed higher Wednesday despite stock prices rising, with yield down to 2.5740% from 2.5940%. The reason, new stimulus means Fed buying shorter term bonds.
Asia Stock Outlook: Up – Most Asian indices closed firmly higher on bullish news of pro-market Republican gains and new US stimulus. Nikkei closes over 2% higher despite the JPY strength from new US stimulus and implied USD weakness, which is bad for export profits.
European Stock Outlook: Up–European shares opening and staying firmly higher following Asia, for the same reasons. FTSE at 2 yr high, other bourses at 6 month high.
Commodities Outlook Wednesday To Midday Thursday GMT: futures for crude, gold, softs all higher with exception of coffee, which is slightly lower from yesterday’s pullback but recovering most of that thus far today as risk asset markets anticipate growth from new US stimulus. Oil hits 6 mo high, sugar continues to new 2010 highs breaks past double top formation
FOREX Daily Outlook Wednesday To Midday Thursday GMT: Clear bias to risk fx as gains in stocks, commodities and overall strength in risk fx show. Strongest fx over the past 24 hours: NZD, EUR, CHF in that order, weakest over the past 24 hours: JPY, USD, GBP in that order. NZD has been the strongest gainer as of the start of today for reasons on combination of risk appetite and good jobs data.
US Dollar Daily Outlook: Up vs. the JPY, down vs. all others for the second straight day as both a risk-on day and threat of new stimulus continue to pressure the USD.
Euro Daily Outlook: Up vs. all except the NZD as USD weakness and ECB’s relative hawkishness overshadow Irish, Greek problems, widening PIIGS bond spreads.
Yen Daily Outlook: Down vs. all on a combination of a risk on day and feared continued BoJ intervention, especially in light of new US stimulus, to lower the Yen.
British Pound Daily Outlook: Down vs. the CHF and EUR, and commodity dollars, up vs. the USD, JPY, and CAD, helped by housing price beat, but risk-on sentiment dominates. Hawkish comments from Chancellor Osborne just out may further boost GBP.
Australian Dollar Daily Outlook: Down vs. the EUR, NZD, up vs. all others despite poor retail, trade balance data today and building permits yesterday as risk appetite overrides local news
New Zealand Dollar Daily Outlook: Up vs. all on combination of risk on day plus good jobs data, which feeds expectations for rate increase.
Canadian Dollar Daily Outlook: Up vs. USD, JPY, GBP, down vs. EUR, CHF AUD, NZD as rising oil is not translating into the usual CAD strength
Swiss Franc Daily Outlook: Down vs. the EUR, NZD, up vs. all others, no obvious reason that this should be the strongest fx of the past 24 hours and continue to show strength today, given the risk on atmosphere and lack of overtly positive EZ or CHF news. Good EZ news benefits the CHF because Europe is the prime export destination.
DISCLOSURE & DISCLAIMER: NO POSITIONS, THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY AND NOT TO BE CONSTRUED AS SPECIFIC TRADING ADVICE. RESPONSIBILITY FOR TRADE DECISIONS IS SOLELY WITH THE READER