7th August – The global bullish sentiment on stocks continued overnight as speculation mounted that central banks around the world will implement stimulus measures to boost their respective economies.
In Asia, stocks rose to a three-month high with Asian trading on Tuesday seeing Hong Kong’s Hang Seng Index gain 0.44%, Australia’s S&P/ASX200 rise 0.39%, whilst Japan’s Nikkei 225 Index was 0.72% higher. The Bank of Japan is currently holding a monetary policy meeting today and is expected to announce its decision on interest rates on Thursday. The BoJ which implemented measures earlier this year to stimulate its economy has shown some signs that its economy may be picking up on its own. However, the yield on Japan’s 10-year debt rose for a second day ahead of the two-day policy meeting with the 10 year yield reaching 0.72 percent on July 23rd, the lowest level since June 2003.
The Aussie traded near a four-month high on sentiment the Reserve Bank of Australia will leave their benchmark interest rate unchanged at 3.50% -the highest in the developed world. In Asian trading the AUD/USD hit 1.0584, 0.13% higher, up from a session low of 1.0554 and off from the high of 1.0588.The pair was likely to test support at 1.0554, the earlier low of Aug 6th, and test resistance at 1.0593, the high on Aug 6th.
In Europe, stocks rose again yesterday with the FTSE gaining 0,37%, the DAX rising 0.77% and the CAC gaining 0.81% as German Chancellor Angela Merkel backed a bond buying plan announced last week by the ECB. This increased speculation that the ECB will act to cut borrowing costs for debt ridden Spain and then possibly Italy.
Despite a slight rise in the fortunes of the USD, Oil traded near its highest close in more than two weeks in New York before a U.S. report forecast to show crude inventories fell to a three month low Also affecting the price of Oil –which had seen some support over last week’s U.S. jobs report, was Tropical Storm Ernesto gained strength in the Caribbean. Crude finished yesterday at $92.20, its highest since July 19th. It was $91.94, down 0.29% at time of writing.
This morning’s focus will be on the release of Italian and UK production figures and German manufacturing orders. Downward trends are expected to be seen so expect possible downward movement for the EUR. Later Tuesday, Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington, D.C with his comments closely followed and later Japan will release bank lending figures, all promising a volatile and potentially profitable day trading Binary Options.