Friday August 14, 2009 - 12:44:43 GMT
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Forex Hound - www.forexhound.com
U.S. Consumer Confidence to Set Tone Today
Todayâ€™s U.S. Consumer Confidence Report will set the tone in the markets today following yesterdayâ€™s dismal U.S. Retail Sales Report. Traders will want to see if the retail number was just fluke or if it will be confirmed by a drop in consumer confidence. Pre-report guesses are for an increase to 69 in August from a 66 in July.
A better than expected number is likely to trigger renewed interest in higher risk assets. This should help boost equity prices and pressure the U.S. Dollar.
Treasury yields are ticking up slightly overnight. This could be profit-taking in the September Bonds and Notes following a strong week in which investors showed great demand for new Treasury debt at the auction. A lower consumer confidence number will indicate a slowing economy which should help boost Treasury futures.
As the week winds down, the focus today will be on three currency markets which formed closing price reversal tops last week. This week the September Euro, September British Pound and September Canadian Dollar confirmed their technical reversals from last week but only the Euro is in a position to close higher for the week. Look for a weaker Dollar if the consumer confidence number comes out better than expected.
A weaker Dollar should trigger a rally in December Gold. This market has been driven by the direction of the Dollar all week as inflation has been taken out of the equation. Signs that the economy is improving is also expected to boost September Copper prices.
September Crude Oil could gain if the Dollar weakens. A better than expected consumer credit number should send equity prices higher which would give crude oil a boost. In addition, it would be a sign of an economic recovery which would mean more demand for energy products.
Equity markets are poised to break out above last weekâ€™s highs but may need a boost from consumer confidence following yesterdayâ€™s poor retail sales report. Volume has been extremely light this week so movement in any direction is likely to be exaggerated.
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