Australian Stocks Rally On China Trade Data
Chinese exports were strong last month and that is boosting Australian stocks. China is Australia’s number 1 export market and the continued strength in the Chinese recovery bodes well for Australian companies. The ASX 200 is up 35.6 points to 4971.30 on this Friday afternoon. The China data offset a bearish assessment from the Reserve Bank of Australia that growth will slow in 2013. The Aussie dollar is paying closer attention to the RBA data and continues to trade weak. The Aussie is at 1.02949 US dollars, 96.106 yen and 1.23094 kiwis.
Euro Drops On Draghi Comments
I said yesterday that market direction in the euro was going to be dictated by Mario Draghi’s press conference and he didn’t disappoint. Draghi caused the biggest drop in the euro in 7 months by suggesting that the recent strength in the euro could dampen inflation and cause the European Central Bank to cut interest rates. Last July, Draghi turned the sentiment to the euro’s favor when he pledged to buy government bonds to boost the European recovery. The result has been that Draghi is seen as a very credible source by the markets.
As you can see from this euro chart, the market started to take a tumble at 730am Central time when Draghi started speaking. All binary traders had to do was listen to his words and see the action happening on the chart. The weakness was screaming “Sell” and buy “Puts”. Congratulations to those traders that followed this advice yesterday!
Aussie Dollar Weakens For 4th Straight Week
The Reserve Bank of Australia cut its economic growth and inflation expectations today. The RBA has signalled that there is more room for interest rate cuts. Expectations of interest rate cuts weakens a currency as investors look for currencies where the Central Banks won’t be cutting. The one positive for the Aussie is that data out of China has been strong and that should provide some support for the Aussie at these levels.
Japanese Stocks Drop On Sony Loss
The Nikkei 225 dropped 203.91 points to close at 11,153.20. Sony dropped 10 percent on an unexpected loss. Most traders are using the selloff in the euro and the Sony loss as an excuse to take profits. I’m not too alarmed by the selloff in Japanese equities.
Traders are unwinding their short positions in the Japanese yen along with selling Japanese stocks. The US dollar is at 93.258 yen, down .358, the Aussie at 95.998 yen, down .257, the euro 125.060 yen, down .355, and the British pound at 146.702 yen, down .399.
Commodity Summary
Most of the major commodities have barley budged. It seems like I’m looking at the same prices for crude oil, gold and silver. Right now we’re just seeing a lot of back and forth action on prices. There’s nothing definitive to drive prices higher or lower. I advise traders to avoid gold, silver and crude oil until a catalyst appears to drive prices.
The grain market will have a catalyst today as the US Department of Agriculture releases its supply/demand report. The report comes out at 1100 am Central time and commodity traders need to watch this report. Traders have been selling corn expecting supplies to increase and have been buying soybeans expecting that market to tighten. Soybeans are pushing the $15 level and corn is holding the $7.10 level.
Economic Calendar
- 0815 Swiss Retail Sales (YoY) 2.0% forecast 2.9% prev (CHF)
- 0900 Italian Industrial Production 0.3% forecast -1.0% prev (Euro)
- 1000 Greek CPI (YoY) 0.70% forecast 0.80% prev (Euro)
- 1000 Greek Industrial Production (YoY) -2.90% prev (Euro)
- 1315 Canadian Housing Starts 195.00K forecast 198.00K prev (CAD)
- 1330 Canadian Employment Change 5.0K forecast 39.8K prev (CAD)
- 1330 Canadian Unemployment Rate 7.0% forecast 7.1% prev (CAD)
- 1330 Canadian Trade Balance -1.0B forecast -2.0B prev (CAD)
- 1330 US Trade Balance -46.0B forecast -48.7B prev (USD)
As always, good luck to all binary and forex traders. Be sure to have a great weekend and rest up for next week!
