eToro Daily Market Review Sep 30, 2009


Is The EUR/USD now Approaching a Possible Turning Point?

After a lackluster session, the major U.S stock indices yesterday’s trading day in negative territory. Even though Monday’s impressive session had a positive effect on the start of yesterday’s trading day, economic data showed a mixed picture, putting a halt on the rally. The S&P500 finished the day with a mild loss of -0.22%, while the Nasdaq dropped by 0.31%

Economic data has an impact on the session, sending mixed signals. On one hand, the S&P/CS Home Price Indices Composite, showed that the housing sector in the U.S is slowly improving, as it came out at -13.50%, compared to a consensus -14.50%. On the other hand, CB consumer confidence showed a disappointing result, coming out below expectations, at 53.1.

The major mover of the day was CIT Group Inc, increasing by 31.74%. The move came as news headlines reported that the company is planning a unique plan that would eliminate more than 40% of its debt. According to Reuters, the plan will offer bondholders new debt secured by CIT assets, preventing their investments from getting wiped out.

The stock jumped throughout the session, on high volume, breaking resistance of $1.86.

The Dollar Presents Mild Strength

On the Forex market the Dollar index has climbed over the last week, but has lost its momentum as the trading days have progressed. One must note that the major U.S stock indices are still showing positive signs, something that is having a negative effect on the U.S Dollar.

Even though officials have stressed the importance of a stable and strong Dollar; ECB President Jean Claude Trichet stated on Monday that a strong Dollar is essential for an economic recovery, while Japan’s finance minister expressed concerns about the recent volatility in the markets and the high level of the Yen, the Dollar is failing to present any major strength.

The GBP/USD retraced, bouncing off support during yesterday’s session, while the AUD/USD continued to climb higher. The EUR/USD has now reached a possible support level, whereas stabilization could present a turning point, sending the EUR/USD higher. When taking a glance at the chart below, one can see that the EUR/USD has now touched its 50% Fibonacci retracement level, which coincides with trend line support. A stronger equity market could have a positive effect on this pair, driving it higher.

EUR/USD- Daily Chart

Market Data to Watch Out For

Even though a wave of data is expected to be released today, the two major events will be released during U.S hours.  To start, ADP employment data will be released and is expected to show a major decrease of job losses. The expected result is currently showing a -200.00 figure, while last month’s figure came out at a whopping -298.00. Furthermore the U.S will release its awaited GDP result. The quarterly result is currently expected to show further contraction and come out at -1.2%.

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

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