Oil hits a New Record
by: cordieliea | Total views: 115 | Word Count: 393 | View PDF | Print View
The sell off on Friday was caused not by
all time highs, but by the worst US jobs data for five years. Initially
shares attempted a recovery as rumours of emergency rate cuts did the
rounds. According to analysts, the jobs data solidifies the prospect of
0.75 base point cut at the next FOMC meeting. However, this wasn't
enough to lift the gloom and the weak rally soon turned into a rout.
Tremors
from the mortgage sector continued to worry traders, as US mortgage
foreclosures reached all time highs, and mortgage hedge fund Carlyle
Group failed to meet a margin call. Not only is this global credit
crunch far from over, there are signs that the crisis is directly
impacting the wider economy. The Bank Of England's weapon of choice in
such circumstances is to cut interest rates, but their hands are
currently tied because of soaring commodity prices. To make matters
worse, the impact of a rate cut may have little effect on consumers, as
the cost of lending remains stubbornly high.
Following
the black Monday crash in 1987, markets effectively traded in a range
for 8 months. Even though shares recovered, it took two years for the
Dow Jones to regain the previous highs. Given the recent slew of poor
economic data, the bulls could think themselves lucky if a range
trading environment is the picture for the coming months. The benchmark
S&P 500 index is now within 23 points of its January lows, if these
hold the bulls will be breathing a huge sigh of relief.
Next
week is thankfully lighter on the economic data front, but there is
still enough to keep traders busy. Notable data to be released next are
UK Industrial production and PPI figures on Monday, US trade balance on
Tuesday, US core retail sales on Thursday, the Swiss interest rate
decision also on Thursday, and Finally Core CPI and Consumer sentiment
on Friday.
With little headline
data from Europe next week and a 0.75 base point cut already starting
to be priced into the Dollar, further upside on the EUR/ USD could be
limited next week. A No Touch trade predicting that the EUR/ USD won't
touch 1.5750 over the next 7 days could return 10% with BetOnMarkets.
About the Author
Mike Wright
Rating: Not yet rated
