Happy Thanksgiving!
On the eve of Thanksgiving it is important to look back and to reflect on our blessings. As I will be out for the holiday tomorrow, it is important to know that while the US markets are closed, the forex market will continue to trade. This reduction in volume could cause volatility, especially if the risk themes that have dominated the market of late persist.
Though that does not appear to be the case this morning, as positive economic data has rallied the markets after yesterday’s sell-off. In addition, the Irish austerity plan will be out this morning that will show how they intend to cut spending to handle their debt issues.
The “good” news on the economic data front was that only 409K people lost jobs last month, beating expectations and creeping toward a number in the 300s. However at this pace it may be a LONG time before we see meaningful improvement. But I guess this is something to be thankful for.
Something to not be thankful for is for new homes sales, which came in way lower than expected, posting a decline of 8.1% vs. an expected gain of 1.6%.
This all adds up to a risk-taking scenario with stocks and commodities rebounding from yesterday, as more economic clarity calms fears.
In the forex market:
Aussie (AUD): The Aussie is higher across the board economic fear subsists and risk appetite returns to the market. (Click chart to enlarge)
Kiwi (NZD): The Kiwi is also higher which is good news, however the fate of the NZ miners appears to not be as miraculous as that of the Chileans. This is the worst mining tragedy in NZ in nearly 100 years.
Loonie (CAD): The Loonie is higher as well as risk has subsided and oil prices have rebounded. Encouraging economic data from the US also bodes well for Canada.
Euro (EUR): The Euro has traded back from just under 1.33 vs. USD and is now positive on the morning. German IFO sentiment figures came in better than expected, though industrial orders in the region missed expectations. The big news is that the Irish austerity plan will be unveiled today which is necessary for them to receive the economic bailout. (Click chart to enlarge)
Pound (GBP): The Pound is mixed as GDP figures came in as expected posting a quarterly gain of .8% which pushed the YoY figure to 2.8% growth.
Dollar (USD): The Dollar is weaker as risk appetite has increased ahead of Thanksgiving. Better than expected initial jobless claims trumped a weaker than expected durable goods orders number, which showed a decline of 3.3% vs. an expected gain of .1%. The new home sales figures were not as positive but the market doesn’t care as it takes a break from risk-aversion.
Yen (JPY): The Yen is lower across the board as yield seeking returns and carry trades are re-established after recent un-winds.
There is a lot to be thankful for in the markets today and it sometimes is too easy to be negative in light of recent events. So today I am content to sit back and enjoy, as things could be a lot worse.
Happy Thanksgiving to all!
And watch out for the volatility!