Jan 28 2008
World Markets Open With A Big Drop.
As we begin the last week of January, investors will look to recoup from last week’s volatility. Last week saw a host of important economic data, which would have contributed considerable volatility to the market on its own; however unexpected news was the main focus for traders. Firstly came Fed Chairman Ben Bernanke’s unprecedented and unexpected rate cut of 75bp last Tuesday, this news took the downward slide in the dollar and Dow and reversed the trend. Secondly, was the news regarding fraudulent activity at French firm Societe Generale, which suffered a detrimental case of employee trading fraud upwards of 7 billion Dollars. The market responded in turn showing turbulent movement to end the weeks trading.
This week should continue to produce volatile conditions as a plethora of significant data is to be released. Non-Farm payrolls, GDP, core durable goods, ISM and manufacturing numbers are all on tap. There is also continued speculation that Wednesday’s scheduled interest rate statement will see another 50bp rate drop, in another effort to ease the falling US economy.
Today’s calendar from the US will see New Home Sales released at 15:00 GMT. As the housing market has been one of the main catalysts in American financial woes, it is no surprise that New Home Sales is expected to fall yet again. Forecast’s have the number dropping from 647K to 640K, its lowest mark in over 12 years.
As the US government slowly initiates their new stimulus plan, expect the dollar to continue to disappoint against its major counterparts, before Wednesday’s expected rate cut.
My Forex Blog
Should be a wild one this week with the Fed on Wed and NFP on Friday! Unlikely that the outcome of the fed meeting will be bullish for the dollar…