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Commentary: If news came out and nobody was paying attention, would it still have an impact?
00:00, 08 October 2013
USD and US indices have been trying to stabilize overnight following yesterday’s selloff, with limited success. Similarly, although some of yesterday’s defensive winners like gold, silver, JPY and CHF have given back some of their gains, they really haven’t fallen back very far. On balance today’s rebound attempt has been pretty feeble, and with European indices still in the red today any rebound attempt may quickly fizzle. Overall, trading remains choppy today and markets may continue to bounce around through the week with the potential for sudden reversals depending on rumours and developments. Even though another delay to tapering looks likely, bulls may struggle to make headway given the risk that the situation could spiral out of control if politicians make a mistake. Although a default still seems unthinkable due to the damage it would inflict on both sides, with the debt ceiling deadline 9 days away, officials in China and Japan, the two largest owners of US Treasuries, have started to voice their concern about the situation. At the same time, the potential for a big relief rally on a deal and risk of getting caught offside may keep the bears from going too far either. There are two significant announcements scheduled for today that normally could impact trading but may be ignored given current circumstance. First up is the IMF semiannual world economic outlook report, which depending on how forecasts are raised or lowered, could still have an influence on currency trading. Later in the day, Alcoa kicks off earnings season. Now that it is no longer a Dow stock, however, it remains to be seen if this will still have as much of an impact on sentiment as in the past or if traders will start to focus more on the big bank earnings due Friday or next week’s blue chip reports for an indication. A lot of companies are likely to come in with cloudy outlooks this time around and blame any distortions on the shutdown and political situation in the US. Because of this, traders may focus more on the results over guidance for an indication of what kind of momentum, if any, the economy had through the summer. Economic News Significant economic announcements released yesterday afternoon and overnight include: Australia NAB bus conditions (4) vs previous (6) Australia NAB bus confidence 12 vs previous 6 China HSBC service PMI 52.4 vs previous 52.8 Japan trade balance (¥885B) vs street (¥880B) UK same store sales 0.7% vs street 2.0% Germany trade balance €13.1B vs street €15.0B France trade balance (€4.9B) vs street (€5.0B) Germany factory orders 3.1% vs street 4.0% Italy Deficit to GDP 4.1% vs previous 7.3% Canada housing starts street 185K Canada trade balance street ($0.7B) US trade balance delayed due to US government shutdown IMF World economic outlook Economic reports due later today include: 9:00 am EDT IMF world economic outlook After 4:00 pm EDT Alcoa earnings