Equities steadied early NY helped by a decent Consumer Confidence number and some more good Earnings Reports following more fears of Chinese credit tightening overnight, which hit Equity Futures during the Asian and early Europe session. With the usual Dollar and Yen strength accompanying when the risk trade is off.
S&P did lose its gains and more in the afternoon, Equities still do look weak as uncertainity about the issues that effected the market late last week persist: Bernanke’s renomination, potential Chinese tightening measures and Obamas’ planned Bank Trading regulations; tomorrow is FED day though.
UK GDP came in well below expection 0.1% vs 0.4%E .. the Pound had already lost considerably before the release, GBPYEN down almost 300pips, and really didnt give us anything to short and i certainity didnt feel conformable going long with the equity markets in their apparent precarious state, on top of that weak GDP number, even if GBPYEN was in its higher band of average daily ranges. Cautiously looking to short rises may be play on that pair until Equities do find some conviction.
Fed Rate Announcement/Statement – Wednesday 14.15 EST.
FOMC announce their latest interest decision. The market again expecting no change to the very low rate band. Main focus will be on wether or not the ‘exceptionally low rates for extended period’ rhetoric will be altered in anyway to a more hawkish stance. Personally i doubt it, but there has been a few Fed Heads coming out with slightly more hawkish tones of late, so we do have to be aware of that potential. If that were to occur, the Dollar should strengthen and Equity markets will most likely take a hit which would put a lot of pressure of the Yen crosses. The last couple FOMCs’ seen the Dollar strengthen significantly post announcement, almost in spite of what the Fed had to say in that statement, and this could happen again.
We also have inflation data out of Germany, Sales data out of the UK, and more (likely ugly) housing data out of the States tomorrow.
C.
