MORNING BRIEFING: The Fed adopts a milder outlook for global economic recovery

What’s new:
United States: Data for new home sales disappoints
Federal Reserve: FOMC  keeps rates unchanged adopts a milder outlook
United States: A poll reveals Obama’s rating are deteriorating; attributable to Gulf spill handling
Australia: Former PM Rudd steps down on the back of mining tax controversy
Asia: Asian equity indices edge higher, pushed by mining stocks
Forex: Euro and GBP higher against the US Dollar

Today:


Rates in Asia and Indices:
EURUSD: 1.2351 - 1.2297.
USDCHF: 1.1064- 1.1031.
GBPUSD: 1.5000 - 1.4953.
EURJPY: 111.01 – 110.52.
USDJPY: 89.97 – 89.79.
DowJones: 10'298.44 +0.05%
NASDAQ: 2'254.23 -0.33%
S & P 500: 1'092.04 -0.30%
Nikkei: 9’987.94 +0.65%
Shanghai: 2'579.75 +0.38%
Gold: $ 1'237.00
Crude Oil: $ 76.40

 
Comments:

In the United States yesterday’s data release for new home sales disappointed investors as they came out much worse than was expected. This deterioration may possibly find its roots in the expiration of a homebuyer tax credit.

As was expected and mentioned in yesterday’s morning comment - the Federal Reserve renewed its vow to keep interest rates low for an ‘extended period’. It also reformulated its assessment of the economic recovery to a milder version even though it still expected a gradual emergence from the recession.   The US Dollar lost support against the Euro in late trading, and US equities had a mixed close.

A Wall street journal/NBC news poll revealed that Obama’s ratings fell from the previous month, mostly explained by the fact that half of the surveyed disapproved the handling of the Gulf spill and more importantly more people from those surveyed disapproved his job performance.

Australian Prime Minister Kevin Rudd steps down to make way to the first newly appointed woman Prime minister Julia Gillard. Rudd lost much support on the back of a huge controversial mining tax that ended in a dispute.  Gillard invited miners for new negotiations, and promised to call elections within months. On the news AUD experienced an initial rise.

Euro and British pound edged higher in early trading this morning, mostly as Australian mining shares led Asian stocks higher after former PM Rudd stepped down.


Good day,

Rudolf Muscat
Trading desk

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