Big day today for the markets as investors await the ECB and Bank of England rate announcements, just one day before the all-important US NFP number.
- Risk appetite has taken global stocks to new highs, with the US stocks closing on Tuesday at their highest levels in nine to 10 month. The safe-haven currencies; USD and JPY have been sold off heavily.
- The sterling traded close to a nine-month high against the greenback before the Bank of England's policy setting meeting today.Â The wide expectation for the benchmark rate is to remain at 0.5% for the Bank of England and 1% for the European Central Bank.
- The Asian stocks are higher this morning on speculation that Japanese companies will report stronger earnings spurring demand for higher yielding assets. The Japanese yen weakened against 14 of its 16 major counterparts on better optimism and also as the VIX index, a measure of stock-market volatility, fell to as low as 24.86 yesterday.
- However, there are still lingering signs that the recession may be far from over after US reports yesterday showed some worse than expected results.Â The ADP employer services reported that US companies cut about 371,000 jobs for July compared to the expected 350,000 number.
Currency to watch out for: EURUSD & GBPUSD
- The EURUSD pivot point is at 1.4320 with a preference to enter into long positions at 1.4330
- The GBPUSD pivot point is at 1.6900 with a preference to enter into long positions at 1.6910
Today's calendar and market movers:
- German Factory Orders month on month expected to drop to 0.6%
- UK Official Bank Rate expected to remain unchanged at 0.5%
- ECB Minimum Bid Rate expected to remain unchanged at 1.0%
- US Unemployment Claims expected to rise slightly to 587,000
- Wall Street slipped slightly lower yesterday on weak data on the services sector and the higher than expected ADP payrolls report.Â Larger losses were curbed as investors gambled into riskier financial shares.
- As of 06:30 GMT the Nikkei is at 1.32% and the Hang Seng at 0.48%