Monday, December 7, 2009

New Swing Position

Sunday Night Globex Session:
SOLD 1110 E-Mini S&P500 ( ES )
Now trading at 1087.75 ( 9:45am Tuesday morning )
Financial Press Overview:
In the absence of key economic data releases and few corporate announcements, today's trading remained largely under the influence of the direction of the US dollar, as well as under comments made by Federal Reserve Chairman Ben Bernanke.
Speaking before the Economic Club of Washington D.C., Bernanke reiterated the Fed's intent of maintaining interest rates at low levels for an extended period of time. It appears the Fed was compelled to reiterate its stance on interest rates as the market had become jittery after last Friday's stronger-than-expected employment data which had widely been interpreted as a potential early signal that rates may move higher sooner than expected. The jobs data had also sparked short-term strength on the otherwise long-sliding US dollar.
The comments made by the Fed Chairman served to quell the US dollar rally, generating a loss on the greenback against a basket of major currencies. Dollar weakness in turn prompted some early strength in equities and commodities. Interestingly, equities were not able to keep up their rise; the market rolled over in the afternoon. This prompted some market analysts to comment that even the prospect of low interest rates over an extended period of time was not able to entice buyers in this market that looked 'tired'. In contrast, some analysts however believe that given the slow pace at which the economy appears to be recovering, higher interest rates are not in the cards for the near future.
Gold was not able to profit from the sliding US dollar, likely also a result of comments made by the Fed Chairman in his speech today. Bernanke was quoted as saying that 'The Fed is committed to keeping inflation low and will be able to do so....,' adding that inflation 'appears likely to remain subdued for some time.' These comments likely impacted gold today, reducing its appeal as a hedge in inflationary times.

No comments:

Post a Comment