Tuesday, 07 July 2009 22:08:33 GMT
The US dollar and Japanese yen both saw extremely choppy price action, and ultimately ended the day up against the majors as risk aversion drove FX carry trades and equities lower. However, where the S&P 500 and DJIA closed leave very mixed signals, as daily charts of both indices show head and shoulders patterns, but the former ended the day just above its neckline of 880, while the latter made a bearish break below its neckline at 8260. This leaves Wednesday’s price action as being quite critical for the outlook for equities and FX carry trade alike. Personal suspicions sit on the bearish side of the fence, as global economic outlooks may be a bit too rosy for reality, which could ultimately disappointing corporate earnings down the road (and thus, declines in equities).
While there are no major US economic indicators due out on Wednesday, there will be lingering event risk stemming for the upcoming Group of Eight (G8) meeting from July 8 - July 10. According to a program outline on the G8 Summit site, participating government leaders will discuss the world economy, global issues, international issues, development policies, futures sources of growth, and the impact of the crisis on Africa. In between all of these meetings, there will also be a variety of press conferences, leaving ample room open for market-moving commentary.
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