Daily Market Review 04.04.12

Daily Market Review

04^th April 2012

Fundamental News:

Today’s Highlights

· Interest Rate Decision (EUR, 11:45 GMT)

· ECB Press Conference (EUR, 12:30 GMT)

· Treasury Secretary Geithner Speaks (U.S, 12:00 GMT)

· ADP Nonfarm Employment Change (U.S, 12:15 GMT)

· ISM Non-Manufacturing Index (U.S, 14:000 GMT)

The Federal Reserve is holding off on increasing monetary accommodation unless the U.S. economic expansion falters or prices rise at a rate slower than its 2 percent target. “A couple of members indicated that the initiation of additional stimulus could become necessary, if the economy lost momentum or if inflation seemed likely to remain below” 2 percent, according to minutes of their March 13 meeting released today in Washington. The central bank also affirmed its plan, first announced in January, to hold interest rates near zero through late 2014 as the economy’s improvement may not be sufficient to lower the outlook for coming years, according to Bloomberg.

Australia posted a surprise trade deficit for the second consecutive month in February as shipments of coal and metals tumbled, the latest figures from the Australian Bureau of Statistics revealed Wednesday. The seasonally adjusted trade deficit fell to A$480 million in February from a revised A$971 million in January.

Eurozone factory gate inflation slowed less than expected in February due to rising oil prices. Producer price inflation moderated to 3.6 percent year-on-year in February from a revised 3.8 percent in January, Eurostat said Tuesday.

A private sector gauge of inflation in the U.K. showed a rise in March, thanks in large part to rising oil prices. The British Retail Consortium's shop price inflation index was 1.5 percent higher than one year earlier, the BRC reported Wednesday.

EUR/USD: The euro fell against the dollar on Wednesday after the Federal Reserve released the minutes of its last monetary policy meeting. The EUR/USD was trading at 1.31945 at the time of writing and the pair is likely to register market corrections following yesterday’s losses. It seems that markets are trying to push the pair above the key level of 1.32000 ahead of a busy day for the Euro with final services PMI at 08:00 GMT, followed by retail sales at 09:00, German factory orders at 10:00, and the ECB interest rate decision at 11:45 and the ECB press conference at 12:30. Also different sovereign debt auctions will take place today. Investors should be very prudent on the market today and wait for some fundamental news to be released before a taking position on the pair. Positive news from Europe might push the pair up to test the resistance level of 1.32282. Later on the American session, investors should keep an eye on the ADP Nonfarm Employment Change data and the speech of Treasury Secretary Geithner, which might affect the direction of the pair. Speculations and general sentiments will be driving the market today. Investors should be very cautious.

USD/JPY: The dollar was trading slightly lower against the yen today, erasing part of earlier gains after the Federal Reserve said it was unlikely to roll out monetary stimulus programs to boost the economy. The USD/JPY is likely to continue its decreasing trend as a corrective measure to yesterday’s significant increases. The pair will most probably fluctuate within the resistance level of 82.886 and the support level 82.365 as investors are waiting for the ADP nonfarm employment numbers, ISM report on service-sector activity, government data on crude oil stockpiles and the speech of Treasury Secretary Geithner later on the American session. In the meantime, general market sentiments are most likely to affect the movement of the pair. Investors should focus on the fundamental news in the Eurozone, which will be released today to get an indication on the market sentiments. Positive news from Europe might push the pair further down to test the support level of 82.365. Prudence recommended.

Oil (WTI): The price of oil fell on Wednesday after a report showed U.S. crude stockpiles rose and Federal Reserve minutes indicated central bankers saw no need for more monetary stimulus unless economic growth slows. Oil was trading at $103.535 a barrel at the time of writing and the commodity is likely to continue it decreasing trend to test the support level of $103.186 a barrel ahead of the release of some fundamental news in Europe and U.S later today. Investors should be very prudent on the commodity as it is very sensible to news. Any news that indicates a potential economic recovery in Europe and U.S might push the pair up. Market corrections are also expected on the price of oil following yesterday’s declines. General sentiments will be driving the market. A wait and see approach recommended on oil.

DOW: U.S. stocks were lower Tuesday, as Fed minutes revealed that the central bank does not see the need for additional monetary stimulus. DOW fell to a low of 13062.4 points intra trade but managed to lock at 13135.2 yesterday. Today, DOW was trading lower at 13090.7 at the time of writing and the index is likely to fluctuate within the resistance level of 13142.9 and the support level of 13062.4 as investors are waiting for some fundamental news in Europe and U.S to have more visibility on the Index. Positive news from Europe and U.S might help DOW to recoup part of yesterday’s losses. A ‘wait and see’ approach is recommended.

Good Luck in Trading…..