Overall, the market experienced strong moves in Friday trade, during the Asian and the European trading hours. The Asian session started with the dollar strengthening across the board and continued until the early European session. Tonight's Asian session was an exception from the last few months of trading, since most of the time the currency market has experienced range bound trading and choppy markets. During the European session, the major pairs reversed almost entirely the selling seen earlier in the day, as investors started again to buy risk and sell the dollar. The Euro-area PMI reports made a vital contribution to the European reversal, since it showed that the countries that make up the Euro-area are heading towards recovery at a stronger pace than previously thought.
The euro (Eur/Usd) re-tested the 1.4200 area during the overnight session, which was the support area of the side-ways channel seen throughout the prior day of trading. However, the pair bounced from here and started to head higher following the same direction of the currency market. The uptrend received a strong boost during the European session, especially after the German PMI numbers came in much better than expected. On the daily chart, it is trading above all the important moving averages, but just below the 1.4300 resistance area.
The pound (Gbp/Usd) followed the general direction of the market and moved lower during the first part of the overnight session, but recovered those declines in the European trading hours. Going forward, the 1.6600 area represents the next major resistance area that it has to break, but this will only happen on positive equity days. If this does happen, the pair's outlook will shift to the upside from mixed.
The aussie (Aud/Usd) advanced 100 pips during the European session, after it bounced from TheLFB S3 (0.8215), recovering every pip lost earlier in the day, mainly during the Asian session. On the daily chart, it is trading just below the 20-day moving average, which has held the pair for a few sessions now.
The cad (Usd/Cad) almost came to a standstill during the first part of the overnight session, but started to head higher as the whole market declined against the dollar. Helped by these gains, the pair re-tested the intra-day resistance of 1.0950, which was used by investors to buy Canadian dollars. Since then the cad has declined 100 pips and broken below the 20-day moving average.
The swissy (Usd/Chf) rose a merely 20-pips during the Asian session, even though the rest of the market declined at a strong pace against the dollar. During the European session, the pair bounced from the 1.0650 area and moved 60 pips lower. For now, the swissy is trading near the lowest value it touched in 2009.
The yen (Usd/Jpy) fell down to TheLFB S2 (93.45) during the Asian session, 50 pips lower from the spot where it opened in Friday's session. With these declines, the pair sets a new low for the last month of trading, which denotes the strong downtrend seen over the last few months. Over the last 11 days of trading, it has only closed in the green on three occasions.
Small Gains In Europe
Current Futures: Dow -6.00, S&P -0.50, NASDAQ -4.75
European markets and U.S. futures are posting small gains, after a very strong overnight session in which the market found the strength to recover the losses posted earlier in the day.
Asian markets took off on a very pessimistic note, posting declines even from the first few minutes of trading. However, around the London open, European traders stepped in to play, reversing the price action seen before. The S&P futures managed to reverse a 6-point sell-off, while the Nikkei futures market found the strength to reverse a 2% decline. Interestingly enough, at the close of the Asian session, the mature markets closed in the red, while the emerging markets closed above the break-even line, even though the trend has been the other way around until now.
The European cash session opened with small declines, but soon after the opening bell, the major European indexes were trading in the green. Currently, the vast majority of European shares are trading in the green, even though the gains are rather small. The only two sectors that appeared to under-perform the market in Friday European trade were the carmakers and the mining companies, while the rest of the sectors showed a mixed trend or some light-bullish moves. The carmaker sector declined after rumors surfaced that the cash for clunkers program is likely to be halted, while mining companies declined after industry officials have said that demand is not likely to pick up before 2010.
Overnight, the U.K. FTSE added 6.92 points (0.15%) to 4,763.50, while the German Dax rose 10.00 points (0.19%) to 5,321.06.
Crude oil for August delivery was recently trading at $73.50 per barrel, up by $0.60.
Gold for August delivery was recently trading higher by $4.10 to $945.70.