Markets are looking to the little economic data released today for direction, and they are finding room for optimism. While Initial Jobless Claims disappointed at 473k vs. a forecast of 463k, it was not far enough from the mark to discourage. In the previous five weeks Jobless data has shown continuous improvement, and last week's shock NFP number has been critical to giving many traders a sense that the employment situation may turn out to be less grim than anticipated in 2010. U.S. trade balance data for the October showed an improvement, coming out at -32.9 billion vs. a forecast of -36.9 billion. The diminishing trade deficit will encourage analysts to revise their predictions for Q4 GDP higher. Currently, U.S. equity markets are trading moderately in the green. EURUSD, our risk appetite barometer, is holding above the critical 1.4650 level.
The black gold has been in a steady decline for the past week as a stronger USD and ample supply have pushed the commodity lower. Even yesterday's weak inventory data could not halt the downward spiral. In the U.S. session crude has broken below $70 for the first time since October 8. While there is no denying the downtrend, the technical picture is becoming interesting as oil moves into the old $66 -$72 price range which it traded for many months in 2009; at the very least, crude oil should correct higher while in this range as it faces an abundance of support from $65 - $69. Opportunistic buyers may well appear around $66, and sudden increases in tensions on the Iranian issue are more likely than not to occur in our view.
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