Summary
The Equity markets did a quick u-turn after announcements from both BP and the SEC encouraged the markets. BP announced that they might have stemmed the leak in the gulf, and investors speculated that the SEC announcement could be a settlement with Goldman Sachs. The S&P 500, which was down as much as 11 points finished the trading session up 1 point to 1096.
Tomorrow's Events
EUR
9:00
EMU Trade Balance
May
.8B
1.4B
USD
12:30
CPI
June
0
-.2%
CAD
Canada Leading Indicators
July
.5%
.9%
13:55
University of Michigan Consumer Sentiment
74
76
Trading Opportunities
GBP/USD
The pound broke out above medium-term trend line support and touched 1.5475, which is horizontal trend line resistance. The pound gained as the dollar weakened and investors were encouraged by the UK auction on inflation-protected bonds. It is the first such sale since the government indicated it would base state employee pension increases to the consumer price index rather than the retail price index. The pound is likely to test resistance near 1.58.
EUR/USD
The dollar came under significant pressure, and the Euro was the beneficiary of dollar pessimism. The Euro broke out above long term trend line support to close above 1.29 for the first time in 2 months. The combination of poor Industrial Production, which showed a slight gain, hurt the dollar in today’s trading session. The actual decline of .4% in output was masked by gains in Utility output. Manufacturing output was hurt by the cuts in auto output. The 1.9% decline appears to be a correction to the 5.6% jump in May. Excluding auto and parts, manufacturing output was still off 0.3%. The real weight on manufacturing was from consumer goods production. It fell 0.6%, led by a 1.7% decline in the output of appliances, furniture and carpeting. The EUR/USD is likely to test the 1.3000 resistance level.