Equity markets erased
earlier losses after the release of the U.S. Weekly Initial Claims
Report. Trading has been light, but nonetheless, todayâ€™s strength may
be an indication that investors feel that tomorrowâ€™s report may be on
the friendly side.
Treasury futures have been trading mixed but
inside of their recent ranges. Trading has been light as expected ahead
of tomorrowâ€™s employment report. The current range for March Treasury
Bonds is 114â€™16 to 116â€™05. March Treasury Notes have fallen into a
range between 114â€™28 to 116â€™08.
February Gold is under pressure
because of the stronger Dollar. The current chart formation suggests a
possible pull-back to $1108.10 - $1100.34. Downside momentum will
depend on how strong the Dollar gets. The main trend is still up,
however, with $1151.30 a key objective on the upside. The overnight
weakness is profit-taking and is not expected to lead to a change in
trend unless the Dollar Index breaks out over 78.45.
Oil is under pressure as traders are dumping commodity related
contracts because of the rate hike in China and greater demand for
safe-haven assets. By raising interest rates, China hopes to curtail
excessive lending practices and cool off the economy. Traders are
trimming long positions on expectations of a drop in demand for crude
oil. Technically, this market is vulnerable to the downside with
potential targets at 78.80 and 77.56.
The U.S. Dollar is holding
on to its early morning gains at the mid-session. This morningâ€™s weekly
initial claims report showed that fewer workers filed for unemployment
benefits last week. The ability to hold on to its gains this late in
the trading session may be an indication that investors are
anticipating a friendly U.S. Non-Farm Payrolls Report on Friday. Volume
has dropped off noticeably which is a strong indication that the ranges
for the day have been made.
The U.S. Dollar erased early
overnight losses to move higher after China shocked the Forex markets
with a surprise hike in interest rates. Chinaâ€™s move to curb excessive
lending and curtail price increases drove traders into lower yielding,
safe haven currencies. Chinaâ€™s central bank sold 3-month bills at a
higher interest rate for the first time in 19 weeks.
continued to erode in the March British Pound after the Bank of England
announced that interest rates would remain at 0.50% while leaving its
asset purchase program in check. Overnight selling pressure took out
weak longs who were trying to establish support at a retracement zone
at 1.6036 to 1.5988. If selling pressure continues, the most obvious
downside objective is the recent bottom at 1.5825.
BoE meeting is the on-going heated debate over the budget deficit.
Prime Minister Gordon Brown and Conservative opposition leader David
Cameron are currently engaged in a heated discussion on how to handle
the growing budget difficulties.
The March Euro weakened
overnight as demand for higher risk assets dropped following the rate
hike in China. At this time, the Euro hugging a retracement zone at
1.4349 to 1.4317.
Bearish comments from the new Japanese
Finance Minister helped trigger a break in the March Japanese Yen while
the U.S. Initial Claims number drove it to a four-month low. Overnight
Naoto Kan said he wanted to see a weaker Yen. This announcement is
leading traders to believe Japan may be more inclined to stem any sharp
rise in its currency. Kan feels that his job will be to keep the Yen at
an â€śappropriate levelâ€ť. His job will be to keep up interest in Japanese
Technically, the March Japanese Yen should remain weak
as long as the downtrending Gann angle at 1.0718 remains intact. Based
on the main range of .9876 to .1.1774, traders should look for a
retracement to 1.0825 to 1.0611 over the near term.
Dollar is helping to pressure the Swiss Franc. Current price action
suggests the formation of a daily closing price reversal top in the
March Swiss Franc. Based on the short-term range of .9522 to .9766,
traders should look for a minimum retracement to .9640 - .9612.
March Canadian Dollar traded weaker ahead of the U.S. opening and is
still under pressure at the mid-session. The current chart set-up
suggests a possible closing price reversal top at .9716. The first
downside objective is .9571. Weaker gold and crude oil prices are
helping to weaken the currency.