Overall, the market traded mixed in the Asian session, without anything out of the ordinary. However, the market might have a wild ride ahead, as it prepares for Mr. Trichet's press conference. As well, the dollar index prepares itself to test the 85.00 area, an important resistance level that would require some strong momentum to break any higher.
The Euro (Eur/Usd) reached a one-month low yesterday, as the market expects the ECB to cut the overnight interest rate by 50 basis points later today. The pair also broke under the 50-day moving average, even though it closed the day forming a doji-star pattern. In the Asian session, the euro rose 60 pips, testing the same moving average.
The Pound (Gbp/Usd) found the strength to post its first gains after three days of intense selling. The pair advanced 70 pips, even though at one time it rose as much as 200 pips. The negative outlook surrounding the U.K. economy made the pound trade just pips away from a 6-year low, reached at the end of 2008.
The Aussie (Aud/Usd) already moved 100 pips in the Asian session, something that happens very rarely. The pair is trying to break under the 0.66 level, but it could not move any lower in the last two days of trading. As of yesterday, the pair trades under all the important moving averages, falling 600 pips in the last 6 days of trading.
The unemployment rate in Australia increased by 0.1 percent to 4.5 percent in December, exactly what economists had forecast. This is a fairly steady reading as male unemployment increased by 0.3 percentage points to 4.4 percent while female unemployment decreased by 0.3 percent to 4.5 percent. Employment in Australia decreased by a mere 1.2 thousand in December. This is much less than the 21 thousand that economists had forecast.
The Cad (Usd/Cad) broke for the first time in the last month above the 1.2250 resistance area. The cad rose 250 pips, as the oil supply reached 16-months high. Currently, the cad trades above all the moving averages.
The Swissy (Usd/Chf) traded mostly between the neutral pivot point (1.1195) and TheLFB S1 (1.1135), in a very volatile manner. The swissy struggles for the last few days to break above the 1.12 resistance area, but until now, lacked the momentum to pull the move.
The Yen (Usd/Yen) is trading within the same range for the last three days. The 88.50 area acts as a support level, while the 90.50 level acts as a resistance. Yesterday, the yen declined 50 pips, reflecting the selling from the U.S. markets after the retail sales report. In the Asian session, the yen moved along side the neutral pivot point (89.15).
Machinery orders for Japan fell by 16.2 percent in November, which is almost twice the forecasted decrease. This is the steepest drop ever recorded; indicating the overall outlook for the country's industrial sector is grim. Machine orders from manufacturers fell an astounding 33.2 percent. Domestic corporate goods prices came in better than the expected 0.8 percent, with a reading of 1.1 percent for the month of December. However, this figure is lower than Novembers 2.8 percent reading.
Asian Markets Drop On Poor Data
Asian trade: Following the very weak retail sales report, equity markets around the world are surrounded by red. The U.S. markets posted tonight the biggest decline from the last period, while the Asian stocks fell to the lowest value seen in the last 5 weeks.
There were two key reports tonight that might have made the bulls change camps. The U.S. retail report showed that sales fell for six consecutive months in December, making it the worst Holiday season in the last four decades. Retail sales were forecasted to fall by 1.2%, instead of the printed 2.7%.
Also tonight, a report showed that machine orders plunged in Japan by 16.2% in November, the most on record. A huge decline in machine orders is detrimental to a country where the whole economy is based on technology exports. The report shows that the Japanese corporate environment cuts back on its spending, which also does not help the economy.
Tonight, the Nikkei fell 335.68 points (3.98%) to 8,102.77. The Australian S&P/Asx lost 135.90 points (3.69%) to 3,551.10.
Crude oil is trading again near the $36 area, after oil supply reached a 16-month high. Crude oil for February delivery fell $0.30 to $36.80.
Gold moved very little in the Asian session. Bullion for immediate delivery rose $1.00 to $809.80.
Previous Wall Street trade: At the close of floor trading on the NYSE, the DOW was on 8200.14 after falling 248.42 points (-2.94%) while the S&P finished on 842.62, down 29.17 points (-3.35%). The NASDAQ closed on 1489.64 with a loss of 56.82 points (-3.67%). Bonds were bought as stocks declined, with the yield on the 2-year note falling 2.8 basis points to 0.714% while yield on the benchmark 10-year note fell 9.3 basis points to 2.201%. The dollar was mixed, with gains of 0.06% on the euro, 0.71% on Australia's dollar and 1.87% against Canada's currency as it fell 0.31% to the yen and by 0.51% to sterling.
Previous European trade: In Europe, the U.K. Ftse fell 218.51 points (-4.97%) to 4,180.64, while the German Dax lost 214.59 points (-4.63%) to 4,422.35.