Asian Stocks Perform Better. Focus on UK Inflation
The EURUSD broke the 1.2800 barrier and looks like it will stall out for the rest of this week. The EURGBP also grew strong with a robust climb to 0.8091 giving hopes that the Euro is gathering momentum and set to rally. This comes against the backdrop of news from ECB which said that Greece will stay in the Eurozone, ascerting the fact that there were no talks about a Greek exit. One of the executive members of the ECB, Joerg Asmussen spoke at a conference in Germany reiterating ECB’s stand.
The UK economy continues to remains vulnerable to the Eurozone crisis as UK is dealing with a slow growth and a stubbornly high inflation. The British Sterling weakened after last week’s Bank of England inflation report which cut short the growth forecasts and raising expectations about further quantitative easing. Focus will be on today’s inflation report from the UK which is expected to increase to 0.6%.
The European markets were performing positively with the FTSE100 was hovering at 5319.20 while the CAC40 gained support at 2940, inching slightly higher at 2018.20. The DAX30 also moved a bit higher to 6362.
Investors are expecting the French President Hollande to suggest the join Eurozone bonds at the EU Summit meeting in Brussels, tomorrow (23rd May). Joint bonds could potentially help address the funding difficulties for some Eurozone countries that are ridden with debt. However the policy is being opposed by Germany.
It is expected that the EU leaders will focus on growth and help find ways for Greece to stay in the Euro. The single currency, despite showing signs of positive rally continues to remain under pressure. Spain continues to worry the markets and investors are anxious ahead of a Greek repeat election.
Stocks across Asia were on a rally early Tuesday morning tracking the overnight gains in the US as most of the indices were trading higher, even if it was by just 1%. Resource and Tech. shares helped the rally. The Hang Seng index was trading 1% similar to the Nikkei Stock Average. Australia’s ASX 200 index added 0.9%. Automobiles made solid gains as Mazda Motor Corp. was trading up by 2.9% while Nissan and Kia were trading higher by 3.6% and Rio Tinto added 1.4%.
Focusing on the currency markets across Asia, the USDJPY was holding stable at 79.36 as AUDUSD climbed to 0.9920. The NZDUSD followed suit trading at 0.7650. When the Asian markets are closed, the spotlight will be back on the European markets.
Investor focus will be on BoJ’s two day policy meeting starting from today. The biggest question on everyone’s mind will be if the Bank of Japan will step in to ease the markets.
In the US, stocks bounced back after what seemed to be a bleak time at Wall Street with the Dow rallying at triple digits. Talking about the Facebook IPO, shares fell below 10% of the opening IPO price immediately after trading was open. The support for the underwriters of the IPO seems to be dissipating after Friday’s debut. APPL was trading 5.8% higher at $561.28. The NASDAQ seemed to have its best day of this year with a positive move up at 2542.75. JP Morgran announced suspending its share buy back program which comes hot on the heels of its trading losses of more than $2 billion.
Today’s focus will be on the US Existing Home Sales Index and the Fed. Manufacturing Index key indicators that will be closely followed by investors.
Crude Oil rose back to 93.32 dollars a barrel from 90.89. Gold (XAU) moved closer to 1584.62 dollars an ounce from 1599.28 and against the Euro it dropped to 1242.81 from 1247.45 Silver (XAG) dropped to 28.05 dollars an ounce from 28.79
|EURUSD||1.2760||LONG @ 1.2760||56% of deals buy EUR|
|USDJPY||79.50||SHORT @ 79.50||80% of deals buy USD|
|GBPUSD||1.5775||LONG @ 1.5775||66% of deals buy GBP|
|AUDUSD||0.9845||LONG @ 0.9845||72% of deals buy AUD|
|GOLD||1579.00||LONG @ 1579.00||70% of deals buy GOLD|
|OIL||92.00||LONG @ 92.00||55% of deals buy OIL|