U.S. stocks rallied Tuesday, lifting the three benchmark indexes to 2011 highs. Revenues and earnings for nonfinancial companies have reached record levels, helped by international exposure for many S&P 500 reporting companies. Rebounding from Monday’s losses, the Dow Jones Industrial Average closed up 115.49 points to 12,595.37 — its highest end since June 5, 2008. The S&P 500 Index added 11.99 points to 1,347.24, with industrials leading an advance that included all 10 of the index’s industry groups. The Nasdaq Composite Index gained 21.66 points to 2,847.54, its highest close since October 31, 2007.
Stocks retained the bulk of their gains after a monthly survey showed consumer confidence rising more than expected in April as worries about inflation and employment eased. A still-improving labour market seems to be offsetting the rise in gasoline and food prices for now in terms of consumer psyche, as the confidence level is the second best since early 2008. Crude-oil prices ended a light-volume, roller-coaster Tuesday with mild losses, as traders headed to the sidelines before a key Federal Reserve policy statement and as the day’s economic data came in mixed. Crude oil retreated 7 cents to $112.21 a barrel on the New York Mercantile Exchange.
On Wednesday, the Federal Open Market Committee will conclude its two-day meeting on monetary policy, with Fed Chairman Ben Bernanke presiding over the first-ever news conference following the policy statement, slated for 6:15 p.m. GMT. Whatever thunder the FOMC meeting usually has is being stolen this week by the first of Bernanke’s press conferences. Still investors are unlikely to learn from Bernanke when the Fed will tighten, as it is doubtful that he himself knows. Reversing a weak U.S. dollar in a structural sense requires proactive steps from fiscal and monetary policy on the (ultra-easy policy) exit strategy front, and we’d emphasize the importance of the former, which is overlooked.
Today’s Important Economic Announcements (GMT)
6:00 AM EUR GfK German Consumer Climate
8:30 AM GBP Prelim GDP q/q & BBA Mortgage Approvals
9:00 AM EUR Industrial New Orders m/m
12:30 PM USD Core Durable Goods Orders m/m
2:30 PM Crude Oil Crude Oil Inventories
4:30 PM USD FOMC Statement & Federal Funds Rate
6:15 PM USD FOMC Press Conference
9:00 PM NZD Official Cash Rate & RBNZ Rate Statement
11:30 PM JPY Household Spending y/y & Tokyo Core CPI y/y
NZD/USD
The long term forecast for this pair calls for a continuation of the upwards movement. An up to date fundamental analysis carried out recently put the realistic value of the pair at the level of 0.8500 US dollars to the NZ dollar. In other words, the pair has another 500 points before it reaches its financial target. However, in the short term, so long as the 0.8000 resistance rate is not broken, there is a chance for a move towards drops in the direction of a support rate of 0.7870. It is possible to use a lower resistance level of around 0.7785. With global investors turned wary ahead of the U.S. Federal Reserve’s monetary-policy decision Wednesday, look for the pair to show a technical correction downwards.
Stop Loss: 0.8105
Take Profit: 0.8000
EUR/USD
The euro hit a 16-month high against the dollar on Tuesday, helped by demand from sovereign investors, with expectations that the U.S. Federal Reserve will keep policy accommodative likely to see it extend its gains. The EUR is currently trading higher against the USD by nearly 150 pips at 1.4684. The euro also got a boost from investor relief at the sale of close to 2 billion Euros of short-term debt by Spain. That helped it wipe away earlier losses after some used comments by European Central Bank President Jean-Claude Trichet on the need for a strong dollar as an excuse to cut long euro positions. Looking ahead to today’s FOMC meeting, if Bernanke mentions the word “inflation”, it would quickly strengthen the greenback. Short positions are encouraged.
Stop Loss: 1.4714
Take Profit: 1.4590
Natural Gas
Natural gas futures were down for a second day on Tuesday, amid indications of decreased demand as forecasts showed milder weather in the southern U.S. states next week. On the New York Mercantile Exchange, natural gas futures for June delivery traded at $4.418 during U.S. morning trade, dropping 0.75%. It earlier fell to $4.386, the lowest price since April 21. The Commodity Weather Group said that it now expected normal or slightly below-normal temperatures in the southern U.S. states from April 28 through May 3. Weather forecasts had previously called for warmer-than-normal temperatures during that period. Clearly this week’s trend is downwards; traders would be wise to ride it for as long as possible.
Stop Loss: 4.503
Take Profit: 4.348
Published by www.SolidityBrokers.com
