2010-07-21 11:55

XTB market snapshot

Strong drops on Wall Street might have raised investors’ concern. After the Friday sell-off (S&P 500 lost 2,88%, Nasdaq Composite 3,11%), the next decline would have stood in the way of a July series of gains, increasing the risk aversion. Fortunately, the negative scenario did not materialize. A gossip about FED interest rates cuts helped increase the lending, supporting the economy.

Bernanke in the spotlight

A gossip concerning the Federal Reserve going to cut interest rates has obviously drawn attention of investors to the today’s speech of Ben Bernanke in front of the US Senate Banking Committee, in which he will present the report on the monetary policy. The speech starts at 8 pm CET.

Bernanke should try to calm the sentiment on financial markets. A series of weak figures from the US has raised concern about the second wave of recession. The FED’s chairman will certainly reassure that the American economy grows at a moderate pace. Referring to the slowdown signaled last week, he should state that the growth-supporting policy measures would be taken if necessary. In order to provide balance, information about inflation-cutting measures should also be given.

Wall Street and EUR/USD

The Tuesday growths on Wall Street weren’t reflected by EUR/USD, despite the opposite move from 1,3 to 1,2841 USD following the downward moves on European markets and US Futures. The temporary lack of correlation can be justified using technical analysis. After breaking the 1,27 resistance line, the psychological barrier of 1,3 USD was used for profit taking. The correction may last, until the European banking sector stress-test results are published on Friday. The downward move may deepen, if the sentiment on global markets gets worse. Otherwise the correction may take the form of consolidation around 1,29 USD.

Wednesday calendar

The schedule for Wednesday is quite poor in data releases and events, which could have an impact on market sentiment. Besides the Bernake’s speech in Congress, the investors may pay attention to the Bank of England meeting, weekly data concerning US mortgage loan applications, and a weekly crude oil inventories report. The quarterly reports of the US companies, such as Coca-Cola (1,03 dol. per share expected), Morgan Stanley (0,48 dol. awaited) and Wells Fargo (0,54 dol. a share forecast) will also be watched attentively.

Jacek Mielcarek
jacek.mielcarek@xtb.pl
XTB Poland 

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