Summary
Equity markets started on a positive note, after fabulous earnings released after the bell yesterday by Apple Corp. The positive vibe was wiped away while Ben Bernanke was testifying in front of congress. Market participants were interested in hearing about specific actions that would occur to boost the US economy, and unfortunately the testimony lacked details. The S&P 500 dropped 14 points to 1069.
Tomorrow's Events
JPY
5:00
Japan All Industry Index
May
-.4%
1.8%
EUR
7:30
German PMI
July
58
58.4
8:30
EMU PMI
55
55.5
GBP
UK Retail Sales
June
.5%
.6%
9:00
EMU Industrial Orders
-.1%
.9%
USD
12:30
US Jobless Claims
453K
429K
14:00
US Existing Home Sales
-9.9%
7.6%
Trading Opportunities
EUR/USD
The European bank stress test leaks continue into feed into concerns about their robustness. According to a leaked document, the tests will describe three scenarios: one under benchmark assumptions, one with an adverse scenario, and one that includes a “sovereign shock.” Clearly, this will be the scenario that garners the most attention by the markets. Continued interest in the stress test is causing the Euro to drop, as investor what to see how European banks will fare prior to investing in European assets. The EUR/USD has dropped to a buying area, where trend line support and former resistance currently meet.
OIL
A worse than expected inventory number released by the Department of Energy pushed Crude oil prices lower. The EIA reported a build of 400 thousand barrel of oil, compared to expectation of -1mm barrel (a draw). Both gasoline and heating oil built, and during this time of year, which is the US driving season, inventories in gasoline should be drawing down. Total demand, increase by 3% year over year, which is a positive sign for the petroleum complex. Crude oil is holding above both the 20-day moving average and the 50-day moving average and should hold and continue to move higher toward the $80 dollar resistance level.