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Choppy waters for trading between US shutdown and global PMI data
00:00, 01 October 2013
The new month and quarter are off to a mixed start with a number of major news developments impacting markets in different ways. The US government has gone into shutdown mode and while US indices have rebounded a bit, gains have been small relative to yesterday’s selloff and already appear to be fading. For example the Dow Industrials have been trading up about 30 points relative to yesterday’s 128 point decline. Even if traders do start to look past the shutdown, they may then be staring the debt ceiling deadline later this month in the face which could put a limit on upside until a deal gets done to take care of both issues. The early rebound then, appears to be technically driven with some of those who decided to take profits and get out before the end of Q3 yesterday, deciding to dip their toes back in the water and go bargain hunting. Meanwhile, gold and silver have fallen out of bed again today with gold dropping 2.0% to test $1,300 key support while silver has dropped 3.3% toward the $21.00 level. This suggests that traders may be concerned about the US government impasse, but aren’t panicking enough to stampede into havens. This can also be seen in FX markets where JPY and CHF are running in the middle of the pack today. It seems that many have come to the realization that politicians seem to only really be happy when they are mad at each other. Crude oil and copper also are retreating again today. Manufacturing PMI and other economic numbers from around the world overnight were disappointing on balance with a few exceptions. The The UK cooled slightly from a red hot summer which has been greeted with a higher GBP and a lower FTSE. Sweden came in a lot better than expected, propelling SEK to the top of the charts. A stronger than expected Tankan survey has given some support to JPY and the Nikkei. USD has been soft as it continues to be weighed down by the political crisis. AUD has been rallying following last night’s RBA decision to stay the course on monetary policy including its essentially neutral stance. The central bank indicated it is prepared to act as needed but gave no sign anything is imminent. It also noted that even with the recent rebound, AUD is still down 10% from where it was trading last spring. Because of the government shutdown, some of the indicators due later today won’t be coming out after all and if this drags on, Friday nonfarm payrolls report could be affected. Even still, there’s lots of data from around the world on the way and possible political developments that could impact trading in the coming days potentially creating opportunities for trading. Economic News Significant economic announcements released yesterday afternoon and overnight include: Japan unemployment rate 4.1% vs street 3.8% Japan Tankan large manuf index 12 vs street 7 and previous 4 Japan Tankan small manuf index (9) vs street (12) and previous (14) South Korea trade balance $3.7Bstreet $4.55B Australia interest rate decision 2.50% no change as expected Australia retail sales 0.4% vs street 0.3% Germany unemployment change 25K vs street (5K) Germany unemployment rate 6.9% vs street 6.8% Manufacturing PMI releases include: South Korea 49.7 vs previous 47.5 China official 51.1 vs street 51.6 India 49.6 vs previous 48.5 Sweden 56.0 vs street 52.3 Spain 50.7 vs street 51.2 Italy 50.8 vs street 51.1 France 49.8 vs street 49.5 Germany 51.1 vs street 51.3 Greece 47.5 vs previous 48.7 UK 56.7 vs street 57.5 South Africa 49.1 vs street 54.0 8:58 am EDT US Markit street 53.1 9:00 am EDT Brazil previous 49.4 9:30 am EDT Canada 10:00 am EDT US ISM street 55.0 Economic reports due later today include: Due to the US government shutdown, US construction spending has been postponed.