The markets dropped for a fifth straight day as investors turned downbeat late in the session following comments from Federal Reserve Chairman Ben Bernanke. The Dow Jones Industrial Average closed down 19.15 points at 12,070.81. The blue-chip index has dropped nearly 4% during its five-day skid, its longest losing streak since August. At one point during the trading day, the Dow rose as much as 89 points before finishing lower. The Standard & Poor’s 500-stock index dropped 1.23 points to 1,284.94 while the technology-oriented Nasdaq Composite dropped 1 point to 2,701.
The sharp reversal came after Bernanke offered downbeat comments on the U.S. economy. He said economic growth has been “somewhat slower” than expected, although he added that the recovery should pick back up in the second half of 2011 despite recent signs of weakness. Bernanke also said the recovery two years after the end of the recession remains “uneven” and that conditions –particularly in the labor market –remain troubled. And while he said “accommodative monetary policies are still needed,” Bernanke also gave no indication the Fed was planning to roll out a third special stimulus, or quantitative easing program.
Bernanke’s comments follow a drumbeat of weak economic data and worries that the recovery is running out of steam. The government’s disappointing jobs report last week came on the heels of several weak regional manufacturing reports and consumer confidence data that have fuelled anxiety on Wall Street. If you had to classify it, it’s more glass half empty than glass half full, and there is still no light at the end of the tunnel. Expect further red days ahead.
Today’s Important Economic Announcements (GMT)
10:00 AM EUR German Industrial Production m/m
12:15 PM CAD Housing Starts
2:30 PM Crude Oil Crude Oil Inventories
6:00 PM USD Beige Book
9:00 PM NZD Official Cash Rate
11:50 PM JPY Final GDP
Forex & Commodities Technical Analysis
Crude Oil
Crude oil futures fell to below $99 a barrel in electronic trading Wednesday, amid speculation that OPEC will raise output quotas when it meets in Europe later in the day. Light, sweet crude oil for July delivery shed 45 cents to $98.64 a barrel on the New York Mercantile Exchange during Asian trading hours. The Organization of the Petroleum Exporting Countries member countries will meet in Vienna. Most analysts expect the cartel will increase production quotas, while OPEC’s committee has recommended an increase in output. Oil traders are encouraged to watch any major announcement. Don’t be surprised if we hit $100 before falling back down to $96.
Stop Loss: 98.40
Take Profit: 100.04
EUR/USD
For five straight weeks the financial markets have been in free fall, the longest straight period since 2004. However, despite this, it is amazing to see the strength of the euro that, despite the drop of exchange rates in the markets, continues to push forward in trading against the dollar. The good news regarding the granting of an aid package to Greece alleviates the pressure on the euro – United States dollar pair and has allowed it to reach its present level of around 1.4630. Key support is now at 1.4557, as long as this level holds, uptrend could be expected to continue, and next target would be at 1.4750 area. New highs are expected for the EUR in the coming days.
Stop Loss: 1.4642
Take Profit: 1.4780
USD/CAD
There are ever increasing forecasts that the Canadian Central Bank will raise interest rates sometime during this year. Also, the strong state of the Canadian economy makes the Canadian dollar a leading candidate for a long term buy position. In effect, amongst the seven strongest world economies (G7), Canada is expected to be the first country to show a positive balance in its balance of payments figures. The pair remains in uptrend from 0.9444; the fall from 0.9851 is treated as consolidation of uptrend. Another rise to 0.9900 is likely.
Stop Loss: 0.9734
Published by www.SolidityBrokers.com
