Daily Market Review- 03rd April 2012

Fundamental News:

Today’s highlights:

• FOMC Meeting Minutes (U.S, 18:00 GMT)
• GDP (QoQ) (EUR, 09:00 GMT)

U.S. construction spending took a big hit in the month of February, according to figures released Monday, by the Commerce Department. Construction spending was at a seasonally adjusted annualized rate of $808.9 billion, a 1.1 percent drop from revised January estimates. While, activity in the U.S. manufacturing sector continued to expand in the month of March. The index of activity in the manufacturing sector climbed to 53.4 in March from 52.4 in February.

The Reserve Bank of Australia on Tuesday retained the benchmark cash rate unchanged at 4.25 percent, and said the forthcoming key data on prices will be crucial in determining its next policy moves. On the other hand, Retail sales in Australia were up a seasonally adjusted 0.2 percent on month in February, the Australian Bureau of Statistics said on Tuesday - coming in at A$2.098 trillion.

The British Chambers of Commerce said Tuesday that the economy is showing signs of improvement and may avoid a recession. Still, economic growth remains "weak," the industry group said. The BCC expects the economy to expand 0.3 percent in the first quarter of 2012, after suffering a 0.3 percent contraction in the fourth quarter.

Eurozone unemployment rate rose to a record high in February, reflecting increasing divergences between countries. The seasonally adjusted jobless rate rose to 10.8 percent, the highest since 1997, from 10.7 percent in January, data from Eurostat showed Monday.

EUR/USD: The euro traded lower against the U.S. Dollar Monday, after the release of better than expected manufacturing data. The EUR/USD was trading at 1.33371 at the time of writing and is likely to fluctuate within the resistance level of 1.33763 and the support level of 1.32763 ahead of final GDP and PPI figures in the Eurozone at 09:00 GMT. Volatility is expected later on the American session where the key event for the day, FOMC minutes will be released. Positive news from the FOMC Minutes might drag the pair down to hover around to test the support level of 1.32763. General Market sentiments are likely to affect the pair today, prudence recommended on the pair.

AUD/USD: The AUD/USD was hovering around the 1.0400 at the time of writing after the RBA statement was more dovish than the market expected. The RBA also noted that Australian growth was "somewhat lower than expected”. The pair seems on its way to test the support level of 1.03740 as markets turned bearish on the AUD.  If the pair breaks though the current support level, then the next target might be the support level of 1.03339. Investors should keep an eye on the GDP data in the Eurozone and the FOMC minutes, which will be released later today to get more visibility on the pair. Positive news out of the FOMC meeting might help the pair to test the support level of 1.03339. The resistance level is at 1.04642.

GOLD: Gold prices was trading at $1678.91 an ounce Tuesday as the dollar weakened when strong U.S. manufacturing data came on the market and also on news that an Indian jewelers' strike ended. The yellow metal is likely to continue its increasing trend to test the first resistance level of $1683.50 an ounce. If the commodity breaks through the first resistance level then the next target might be second resistance level of $1693.52. However, investors should remain very prudent on the commodity as later during the day, final GDP and PPI figures in the Eurozone and the FOMC minutes will be released. Investors should pay particular attention on the movements of the USD after the release of the news to get an indication on the direction of the price of Gold. The support level is at $1663.53.

DAX: European shares surged Monday, as manufacturing expanded more than forecast in China and the U.S. DAX was significantly up yesterday and locked around the level 7082.00. The DAX is likely to suffer some profit taking and market corrections intra trade (following the gains of yesterday) ahead of GDP data in the Eurozone and the FOMC minutes later today. Positive news from the Eurozone and the U.S might help the index to gain more ground to test the resistance level of 7122.30 points. The support level is at 7050.31 points. A wait and see approach might be a good strategy on the Index.

Good Luck in Trading…..