Friday May 7, 2010 - 20:06:45 GMT
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Forex Hound - www.forexhound.com
U.S. Stock Markets Continue to Bob Between Positive and Negative.
U.S. equity markets are
trading lower at the mid-session following a tumultuous morning
session. Traders seem indecisive about which side of the market to
take. This morningâ€™s unemployment report came out better than expected,
but the market could not hold on to earlier gains. The firm Euro is
helping to underpin the stock markets but so far the markets have not
seen a catalyst that could drive it higher into the close.
June Treasury Bonds suggest that money is leaving the fixed income
market. The inability to trash the stock market after Thursdayâ€™s
sell-off suggests that fresh buyers are supporting the equity markets
June Gold is trading better. Traders are now treating
gold as a safe haven. A sell-off in the equity markets is likely to
trigger a rally in gold. The next leg up should test the December 2009
top at $1230.00.
June Crude Oil is trading lower. Traders have
been selling off crude oil on the thought that a slow down in the Euro
Zone economy will lead to lower demand for energy products. A rally in
the stock market is likely to trigger a late session short-covering
rally in crude oil.
Concerns over a hung parliament following the
U.K. election helped to weaken the June British Pound overnight.
Although the Sterling has bounced off of its low, worries still linger
that without majority leadership in the U.K., the ruling party may have
difficulties implementing the austere financial measures necessary to
gain control over the budget deficit.
The June Euro is trading
higher. Oversold conditions are the primarily driver behind todayâ€™s
rally. Pressure has been mounting on the European Central Bank to step
in and attempt to instill confidence in the Euro. Among the techniques
being discussed are restructuring risky loans, offering zero percent
loans and buying troubled debt in Greece, Portugal and Spain. As we
near the close the real test will be whether hedge funds and large
speculators press the Euro lower ahead of the week-end, or do they cut
positions. Either way, volatility is expected to remain high.
June Japanese Yen is trading lower after a sharp rally on Thursday.
Overnight the Bank of Japan weakened its currency by injecting 2
trillion Yen into the market. The Yen weakened after this move and has
been under pressure most of the day. The weakness in this currency pair
suggests that stocks may try to mount a rally later in the day.
June Canadian Dollar is trading higher. On Thursday this currency broke
sharply lower when panic hit the stock markets. The easing of tensions
in the equity markets is helping to drive the Canadian Dollar higher at
the mid-session. Technically, this market is trading back inside of a
retracement zone which may mean the start of a corrective break rally.
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