FOREX IN REVIEW

FOREX IN REVIEW

Mario Draghi was unable to continue bluffing markets as his comments created a ripple effect through asset classes. Equities and sovereign debt leaked lower after no new support measures were announced. He not only damaged his own credibility as a Central Banker, but now must wait until September to implement any further protective actions. EURUSD which was volatile the entire session closed below the 1.22 handle and even dropped below the 1.2150 level before rebounding to 1.2175. Equity markets were rattled with Spain declining -5.16%and the Italian MIB sinking -4.64%. The Euro Stoxx 50 was also weaker, falling -3.00%. Sovereign debt yields on Spanish and Italian 10-year debt exploded yesterday, spiking higher as no mention of asset purchases pushed demand lower.

Asian shares which had risen earlier in the week on expectations of further easing from U.S., European, and Chinese authorities have slid for a third straight session as no new measures have been announced for slowing economies. China saw the non-manufacturing PMI contract month over month adding to concerns of a protracted deceleration. Today's U.S. jobs report should provide more clues regarding the expectations of further stimulus measures from Central Bankers who have in the meantime deferred action. Major indices are ticking lower, led by the -1.62% drop in the Nikkei followed by a -0.86% fall in the Hang Seng. The Australian ASX has pared -0.93% in the overnight session. The Yen has strengthened as a flight to quality continues with USDJPY ticking down to 78.180

Markets eagerly await the results of today's labor data which will be arriving later in the form of nonfarm payrolls and the unemployment rate. The biggest economy is forecast to have added 100K jobs last month while the unemployment rate should stick at 8.20%. Stocks revealed the disappointment to "no new measures" as major indices declined. The S&P 500 fell -0.74% while the Dow Jones and Nasdaq both moved lower, crumbling -0.71% and -0.36% respectively. Commodities also fell as another round of asset purchases is off the table at the moment but have since rebounded slightly. WTI crude oil reached its lowest level in 3-weeks before retracing to $87.50 per barrel. Corn futures retreated below $800 per metric ton to $796.75. Gold moved firmly below $1600 to $1593.30.
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