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Forex Blog - US Market Update (Trade the News)
US Market Update
Dow -1.5 S&P -1 NASDAQ -2.7
*** ECONOMIC DATA ***
- (US) MBA Mortgage Applications w/e Jan 8th: 14.3% v 0.5% prior
- (UK) Dec NIESR GDP estimate: 0.3% v 0.2% prior
- (US) Weekly DOE inventories: Crude: v +1Me, Gasoline: v +1.5Me; Distillate: v -1.5Me; Utilization: v 80.2%e
- US equity markets gained very slightly in the premarket today, although weakness in Asian and ultimately European equities seems to be weighing on US indices. Some overall risk aversion swept across equities and commodities in early NY trading after a speech from the Greek PM failed to inspire confidence his government had a cohesive plan to emerge from their current fiscal predicament. All three leading indices are back in negative territory in the first hour of trading. Google's threat to leave China is a major story, and bank CEOs are back on Capitol Hill to testify under oath on the financial crisis before a House committee. Front-month crude has made new multi-week lows below $79 after weekly inventory data showed a build across all three products. Treasury prices opened lower on the back of higher yields in Europe but have since pared some losses as equities have declined. The 10-year yield briefly touched 3.75% before falling back once again as traders await this afternoon's 10-year reopening and the Dec Beige Book.
- Shares of Google are down 2% in early trading, while Chinese search competitor Bidu is up 12%. Overnight Google said it would stop censoring its search results in China and may pull out of the country completely after its e-mail servers were hacked by suspicious elements, possibly from inside the Chinese government. Even Secretary of State Clinton entered the fray, noting that Google's allegations "raise very serious concerns and questions."
- Newsflow continues to be dominated by pre-earnings guidance calls. Kraft raised its 2009 outlook by a hair and reaffirmed its long-term growth goals. Watson Pharma's guidance for 2009 remains well below consensus estimates, although its revenue outlook is in line. KFT and WPI are up a few percent a piece. Health Management Associates guided a bit above par for its Q4 and full year, and offered a bullish view of 2010 revenue. Shares of HMA are up 7%. Res-Care is off 8% after guiding way below par for 2009 and warning that 2010 would remain challenging. Magna's 2010 revenue guidance was lackluster, and shares of MGA are down 2%. LCRY is up 12% on better-than-expected preliminary Q2 results.
- In currency trading, several factors helped the dollar to recover from session lows against European pairs. EUR/USD traded at 1.4580 before marginally retracing towards the 1.4430 area after German Economy Minister Bruederle commented that Germany was not experiencing a self-sustaining economic recovery at the moment and the Greek PM addressed his nation on the pending fiscal debacle. The PM reiterated that Greece was not seeking any IMF bailout or planning to exit the Euro Zone. However, dealers noted that he provided no details on how to finance programs as the country seek to drastically cut its debt-to-GDP ratio down to meet Maastrict criteria over the next few years. The ECB published its opinion on Greek debt restructuring law, stating that the move could hinder flow of credit and hurt markets.
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