Chinese Stock Market Boosts Main Markets and U.S. Dollar Went Bearish


Master Trader
Jun 7, 2009
By Mercaforex

During yesterday’s trading session, the U.S. dollar lost ground against the Euro and major currencies, as stocks markets around the world went bullish. The main markets worldwide went bullish after the Chinese Sock Market recovered, making its best mark since March, which happened after a day when China’s stock market collapsed with losses of 5%. The U.S. stock market trading session finished in an uptrend for the third consecutive time. The Dow Jones went up 0.76% reaching 9.350.05 units, while the NASDAQ gained 1.01% and reached 1.989.22 points. Yesterday, the U.S. Weekly Unemployment Claims were published, which determine the amount of individuals who filed for unemployment insurance for the first time during the past week, showed a reading of 576K, above the forecasted number of 548K. This number hints to alarming conditions in the U.S. labor market and optimism in the market is low. The Philadelphia Fed Manufacturing Index, which determine the general business conditions of manufacturers in the Philadelphia Federal Reserve district showed a number of 4.2 compared to a forecasted-1.9, well above expectations. Finally, the CB Leading Index came in at 0.6%, as was forecasted. As for today, we are waiting the Existing Home Sales numbers, which determine the annualized level of existing residential buildings that were sold during the last month, which is forecasted at 5.3 million, with a previous reading of 4.89 million. Analysts are watching for certain signs of stabilization in the U.S. economy, like the fall of the Crude Oil Inventories, better Housing Market and U.S. stock market recovery. Consumers, however, are tightening their personal finances and worry about unemployment and credit facilities, which are key factors for sustainable economic development.

The U.S. registered a new record for mortgage default payments. The U.S. Mortgage Banks Association stated that the rate of default payments for mortgage loans increased trough the second quarter of 2009 and peaked a new record. Without doubt, we are still watching hurdles in the U.S. economy. Also, we have to mention that very close to the U.S, the Mexican economy contracted 10.3% through the second quarter of 2009 due to low numbers of its industrial and services activities, as was announced on Thursday by the National Statistics Office. The Mexican peso or MXN it is a very popular currency in the Forex Market, and its ranking of participation in the foreign exchange market is one of the forteen most traded currencies. Finally it is important to note that Crude Oil Barrel went bullish. At the New York Mercantile Exchange (Nymex), Crude Oil Value for delivery in September finished bullish at 72.54 USD, gaining 12 cents to its previous session. We are still watching the U.S. dollar’s inverse relationship with Wall Street and the Crude Oil Value. As for today is expected that the U.S. will dollar go volatile, and U.S. Federal Reserve President, Mr. Ben Bernanke, is going to speak.

During Thursday’s trading session, the Euro strengthened against the U.S. dollar again, as U.S. and European stock markets went bullish. Yesterday, there were not risky events on the European schedule, but for today we are waiting the Flash Manufacturing PMI data from Germany, France and the Euro Zone. This indicator determines the activity level of purchasing managers in the manufacturing sector, and a reading above 50 indicates an expansion. Investors will follow this numbers carefully. Analysts estimated that German Economy will have a better development for the third quarter, as the measures that were taken and the local and global stimulus packages started to take effect. In this sense the Bundesbank stated that the monetary and fiscal policies were opportune and assisted to the German economy, but the institution highlighted the fact that German confidence is still vulnerable, and instead they expected a slow economic recovery.

During Yesterday’s trading session, the Sterling advanced against the U.S. dollar, as the U.S. stock markets went bullish. Yesterday, the Retail Sales, which determine the worth of sales at the Retail Level, showed a reading of 0.4%, when forecasted at 0.3%. Also the Public Sector Net Borrowing, which determines the difference between spending and income for the government and public corporations showed a number of 8.0 billion in comparison to the estimated number of 0.3 billion. The M4 Money Supply which measures the change in the total quantity of domestic currency in circulation and deposits in banks showed a reading of 1.0%, when was estimated at 0.2%. This last reading shows that quantitative measures taken by the BoE are starting to have effects. The Bank of England is showing concern about the economic situation in the UK. Governor Mervyn Allister King intended to increase quantitative measures but the majority of the MPC members decided not to raise them. For today, there are no economic risky events on schedule, and the Sterling trend will be defined by the Euro and stock markets developments.

During yesterday’s trading session, the Japanese Yen advanced against the U.S. dollar, as U.S. stock markets went bullish. This is the third trading session that the U.S. stock market closed bullish. Certain risky events in the U.S. brought economical hopes, and the Dow Jones went up 0.76%, while NASDAQ advanced 1.01%. Through yesterday trading session Crude Oil Barrel advanced 0.2 %, after China’s stock market boosted the main stock markets worldwide, and the fear that we saw in the marketplace with the descent of the U.S. confidence sentiment, finally recovered when the U.S. Crude Oil Inventories showed a great fall taking the market by surprise. Since the beginning of the week, Crude Oil Value experienced a very volatile week, fluctuating from 66.75 USD to 72.54 USD per Crude Oil Barrel. By other events, analysts are saying that Japan started a recovery, but maintains itself in a vulnerable territory, as its economical growth will depended on its exporting sector. Next week, it is important to follow the Japan´s Trade Balance figures as exportations play a key role in the Japanese economy.


Active Trader
Nov 28, 2009
Thank You for that great post. I really love to read postings that are about the stock market and its current condition. Reading related articles make me more knowledgeable about stock market as I invested my money in the market. I hope to read more from you. Great Job!


Master Trader
Jun 20, 2009

Have you read the news that Dubai world sought to delay debt payments shocked the financial world last week and triggered massive flight to safety. Whether that is a significant turning point in global recovery or just an excuses for an overdue correction in risk sentiment is up for debate.